Canadian Economy Rebounds by More Than Expected

OTTAWA—Canada’s economy recovered far more strongly than anticipated in the latest quarter, pulled out of its decline by a bounce-back in net trade and a surge in defense spending that helped mask weak domestic demand.

Gross domestic product grew at an annualized rate of 2.6%, Statistics Canada said Friday. That was the fastest pace since the final three months of last year, and considerably stronger than the modest 0.5% growth forecast by economists and the central bank.