Canada’s economy grew 0.6% in the first quarter of 2005, up slightly in from the previous quarter, Statistics Canada reported today.

The government agency said the increase in real gross domestic product (GDP) was driven by consumer spending and strong growth in business investment in plant and equipment. As well, exports rebounded after two quarters of decline.

However, StatsCan said the quarter ended on a down note. GDP declined 0.1% in March after increasing 0.2% in both January and February. A drop in motor vehicle production was mainly responsible for the March decline.

Canada’s economy grew at an annualized rate of 2.3% in the first three months of the year.

By comparison, the U.S. economy grew at an annualized rate of 3.5% in the first quarter.

During March, nanufacturing output decreased 0.9%, dragged down by the automotive sector with a 5.1% decline in motor vehicles and a 3.8% decline in parts. Statistics Canada said weakness in the manufacturing sector was widespread, as 15 of the 21 major groups reported lower activity.