Canada Economy Unexpectedly Shrank in May on Natural Gas, Car Production

[Purveyor]

By Alexandre Deslongchamps

July 31 (Bloomberg) -- Canada's economy unexpectedly contracted in May, as extraction of natural gas slowed and car production dropped, providing more evidence that industries are being hurt by weaker U.S. demand.

Gross domestic product fell 0.1 percent, the fourth decline in six months, to C$1.23 trillion ($1.2 trillion), Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg predicted a 0.2 percent gain, the median of 24 estimates.

The report validates the Bank of Canada's assessment that the economy will slow this year as exports exert a ``significant drag.'' The central bank left interest rates unchanged for a second straight meeting on July 15 and said the economy will grow 1 percent this year, the slowest since 1992, as a strong currency and declining U.S. demand hurt exporters.

``Current policy is probably the right policy,'' said Meny Grauman, an economist with CIBC World Markets in Toronto. ``They can't afford to hike anytime soon'' because the economy is ``weak,'' he said, adding today's figure means second- quarter growth was probably below 1 percent.

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BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601082&sid=aBM9damtaiYE&refer=canada

[marmar]

1. The "First World" is in dire straits these days.....

:scared:

[Muttocracy]

2. wait a minute, I want Canada to be my backup plan! nt