Canada Shows Up Late To The Deflation Party

From Bloomberg:

Canada Economy Unexpectedly Stalls in April on `Payback' for March Growth

By Greg Quinn - Jun 30, 2010

Canada’s gross domestic product unexpectedly stalled in April after seven previous gains, as retailing and manufacturing declined while mining and wholesaling advanced.

Canada’s economic output remained at a seasonally adjusted annual rate of C$1.23 trillion ($1.17 trillion) in April, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News predicted a 0.2 percent gain, based on the median of 16 estimates.

The Bank of Canada says growth will slow to a 3.8 percent annualized pace in the April-to-June period after expanding at a 6.1 percent pace in the first quarter, due in part to slower household consumption. Consumer spending was spurred earlier this year by temporary tax measures that have now expired, and mortgage rates climbed in March and April.

“We’ve had a pretty strong run of growth and April will be one of those payback months,” said Michael Gregory, senior economist at BMO Capital Markets in Toronto. “It will get everyone a little bit more worried about the near term prospects.”

He predicts the Bank of Canada will raise interest rates at its July 20 meeting and then pause.

The Canadian currency weakened 0.3 percent to C1.0587 per U.S. dollar at 10:25 a.m. in Toronto, compared with C$1.0560 yesterday.