OTTAWA, Ont. — Statistics Canada has reported the economy picked up steam in the first quarter of 2007 as real gross domestic product (GDP) advanced 0.9%, more than twice the pace of last quarter.

While exports eased, production levels were strong, StatsCan reported this morning.

Export growth moderated, largely constrained by declines in forestry products and industrial goods and materials. With production up, and both foreign demand and domestic spending easing in the quarter, inventories accumulated.

Merchandise exports eased (+0.5%), continuing the moderate growth posted over the last two quarters. Foreign sales were largely constrained by declines in forestry products (-6.3%) and industrial goods and materials (-0.5%). The Canadian dollar decreased 2.8% against the US dollar in the quarter.

Exports of machinery and equipment were strong this quarter (+2.0%), after slowing considerably in the previous quarter, but were still off the quarterly pace registered in most of 2005. Foreign demand for automotive products was up 2.3% this quarter, following an increase of 7.4% last quarter, reversing the quarterly declines registered throughout most of 2006.

Manufacturing remained unchanged after declining for four straight quarters. Of the 21 major groups, 14 posted increases, accounting for 68% of total manufacturing value added. Manufacturing of durable goods registered its first quarterly increase since the first quarter of 2006. Industrial production (the output of utilities, mines and factories) advanced 0.7%, with mining, oil and gas as well as utilities recording significant gains. Industrial production in the United States edged up 0.2%, as manufacturers and utilities raised output and mining output contracted.

The Canadian economy recorded an annualized growth rate of 3.7%, up sharply from the fourth quarter of 2006 (+1.5%). The Canadian economy outpaced the US economy, according to an advance estimate published on April 27, 2007.