Domestic demand prospects looking less sure

Canada's economy grew by 1.9% annualised in the first quarter, matching the pace in the previous quarter and, given the recent slump in commodity and equity prices, a substantial pick-up in growth this quarter seems less likely. While that was disappointing enough, domestic demand growth slowed for the fifth consecutive quarter, to an annualised gain of just 1.3%. Moreover, domestic demand is still over-reliant on the boom in residential construction, which surely can't last much longer. In an ideal world a pick-up in business investment would take up some of the slack, but it is hard to see that happening when commodity prices are tumbling.