The Canadian economy continues to outpace the American economy.

Statistics Canada reported Friday that economic activity picked up in the first quarter of 2003, as expenditure-based real gross domestic product advanced 0.6%, the result of strong inventory accumulation and sustained household demand.

The Canadian economy outperformed that of the U.S. On an annualized basis Canada’s GDP was 2.4% vs 1.9% for the U.S.

Canadian growth in the first quarter was focused on selected industries. Higher oil prices led to a surge in oil and gas exploration. The strength in the residential construction industry continued. Retail trade remained high, while wholesale trade recorded significant gains. Manufacturing output grew, but there was widespread weakness. The exception was the production of motor vehicles and parts, which was up in the first quarter.

The U.S. Commerce Department confirmed weakness in the American economy with a report this morning that consumer spending slipped in April. Consumers purchased more big ticket items but fewer perishable goods. Personal consumption fell 0.1% in April after a 0.8% gain in March. Personal income was mostly unchanged after an 0.4% gain in March.

Canadian investors are waiting to see the outcome of the standoff between Air Canada and its pilots. Court-appointed monitor of the airline’s insolvency, Ernst & Young, said that failure to reach a cost-cutting agreement could lead to liquidation.

Meanwhile, on Wall Street, investors are ignoring the Commerce Department report. Futures are mildly positive before today’s opening of the equity markets. Analysts say the University of Michigan index of consumer sentiment, due out at 10 a.m., will have more influence on trading.

Overseas, European markets are mixed at midday. The FTSE 100 is down 0.6%. Frankfurt’s DAX is up 1.1%. Paris has slipped 0.4%.

In Asia, Friday trading was also mixed. Japan’s Nikkei average gained 49.15 points to 8,424.51. Trading was driven up the country’s big banks higher and electronics giants Sony, Toshiba and Hitachi. On the downside, major Japanese insurers are reporting weak results because of generally poor stock market performance.

In Hong Kong, the Hang Seng index slipped 21.17 points to 9,487.38.