08/31/2012 08:59 EDT | Updated 08/31/2012 10:54 EDT

Canada GDP: June 2012 Sees Slightly Faster Growth Than Expected, But Still Sluggish

The head offices of Canada's biggest banks are shrouded in fog and cloud as a sign board display's the final closing number of the year for the TSX of Friday, Dec. 30, 2011, in Toronto. (AP Photo/The Canadian Press, Frank Gunn)

OTTAWA -- Statistics Canada says the economy grew at an annual rate of 1.8 per cent in the second quarter, as companies increased investment in equipment and added substantially to their inventories.

The pace of growth was slightly higher than economists' expectations and nearly in line with the Bank of Canada projection for 1.9 per cent.

But it's the third quarter in a row for sluggish economic performance below two per cent.

In a note to clients, CIBC noted that housing investment was weaker than expected.

"Consumption growth was weak, as foreshadowed in earlier retail reports, rising by just over 1 per cent, not much different from the previous quarter’s pace. Net trade was a drag to growth as expected with exports slowing, while government current expenditure was also a drag," the note said.

Statistics Canada says investment in plant and equipment grew at its fastest pace since this time last year and non-farm inventories surged during between April and June.

But exports slowed and imports rose substantially,

In June, gross domestic product grew 0.2 per cent from May.

-- With files from The Huffington Post Canada

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