2018.05.0122:19:00UTC+00Canadian Economy Expands in February

The Canadian economy expanded by 0.4 percent in February, according to Statistics Canada, an indication that first-quarter expansion might outperform the Bank of Canada's relatively weak expectations.

Even if March's GDP figures are flat, Statistics Canada analysis shows that annualized first quarter growth would be 1.6 percent, higher than the 1.3 percent in the Bank of Canada's latest forecast on April 18.

The numbers showed broad-based increases in key sectors such as manufacturing and signs that rail bottlenecks may be dissipating, which implies an acceleration in growth for the rest of the year. After a slowdown that started in the second half of last year, most economists are anticipating growth to return to above 2 percent pace in coming months and prompt the central bank to continue with rate hikes.

Canada's economy slowed down considerably in the second half of last year, and the slump deepened in January as the country suffered through rail disruptions and shutdowns in the oil and auto sectors. However, February showed signs of a clear turnaround.

Fifteen of 20 industrial sectors recorded higher activity in February and excluding oil, GDP was up 0.3 percent for the month.

The Bank of Canada estimates first-quarter growth of 1.3 percent, before the expansion accelerates to 2.5 percent in the second quarter and 2.0 percent for all of 2018.

The central bank, which has hiked interest rates three times since last July as the economy strengthens, says future hikes will depend heavily on economic data.