Statistics Canada says the pace of economic growth slowed in first quarter

OTTAWA -- The pace of economic growth in Canada slowed in the first quarter of this year as housing investment pulled back amid new mortgage stress test rules.

Statistics Canada says the economy grew at an annualized pace of 1.3 per cent for the first three months of the year. That compared with an annual pace of 1.7 per cent in the final three months of 2017.

Economists had expected growth to come in at an annualized rate of 1.8 per cent for the first quarter of 2018, according to Thomson Reuters Eikon.

The weaker-than-expected result came as investment in housing fell 1.9 per cent in the quarter, the largest decline since the first quarter of 2009, due to a drop in ownership transfer costs as the pace of home sales slowed at the start of the year.

Growth in the first quarter was also the slowest pace since the economy contracted in the second quarter of 2016 due to forest fires that destroyed parts of Fort McMurray, Alta., and forced the shutdown of several oilsands operations in the region.

The latest reading on the economy follows the Bank of Canada's decision to keep its key interest rate on hold.