NEWS
08/29/2014 08:53 EDT | Updated 10/29/2014 05:59 EDT

Canadian economy expands at 3.1% pace in 2nd quarter

Canada's economy soared in the second quarter, to an annualized pace of 3.1 per cent, as households spent more, marking the largest quarterly gain since the third quarter of 2011.

The jump in gross domestic product (GDP) was greater than the 2.7 per cent rate economists were expecting, and follows sluggish 1.2 per cent growth to start the year, the economy's worst performance in more than a year.

Statistics Canada said Friday that real GDP was up by 0.8 per cent during the quarter ended June 30, compared to a 0.2 per cent increase in the first three months of  2014.

On a monthly basis, the economy grew in June by 0.3 per cent.

In a statement, Finance Minister Joe Oliver said the news is evidence the government's plan for the economy is working, and that "our unrelenting focus on jobs, growth and long-term prosperity is paying off for Canadians from coast to coast to coast."

Statistics Canada said economic activity increased in all sectors except non-profit institutions serving households.

Consumers led the increase, with household consumption up by 0.9 per cent for the three-month period ended June 30.

Canadians spent 1.2 per cent more on goods in the second quarter, and 0.7 per cent more on services.

Spending on housing showed a marked increase, with investment in residential structures up 2.9 per cent by quarter and home ownership transfer costs up by nine per cent after two previous quarters of decline.

Exports also rose by 4.2 per cent in the second quarter — the strongest performance since the third quarter of 2011 — after declining by 0.2 per cent in the first three months of the year.

In the United States, annualized GDP grew by 4.2 per cent in the second quarter after contracting by one per cent in the first quarter.

In reaction to the report, the Canadian dollar rose by 0.15 cents US to 92.24 cents in Friday morning trading.