Economy slowing sharper than headlines suggest

Canada's economy continued to lose momentum in the final quarter of last year and the slowdown was only partly due to lower oil prices. Furthermore, the seemingly gradual slowdown in headline GDP growth masks a potentially much sharper decline in activity. Excluding the build-up of inventories in the fourth quarter, final demand growth slowed abruptly to an annualised pace of only 0.7%, from 4.5% in the previous quarter. This trend bodes poorly for economic growth in the first half of the year.