The Canadian economy bounced back from a soft end to the first quarter, Statistics Canada said Friday.
Real gross domestic product (GDP) grew 0.3 per cent in April, the agency said, in line with its initial estimates. Early expectations have growth holding positive in May, but easing to a rate of 0.1 per cent.
Wholesale trade, mining, quarrying, manufacturing and oil and gas extraction industries were all up in the month, StatCan said. The arts, entertainment and recreation sectors were also buoyed by four Canadian teams vying for the Stanley Cup as the NHL playoffs began in the month, the agency noted.
Construction activity meanwhile pulled back in the month after March saw the sector’s largest increase since October 2022. A slowdown in builds of new single and multi-family homes, as well as in home improvement work, contributed to the decline, StatCan said.
April figures are up from flat growth in March, as the Canadian economy got off to a hot start in 2024 but showed signs of waning at the end of the first quarter. Canada also narrowly avoided a technical recession in 2023 as elevated interest rates weighed on growth.
“After struggling to grow at all through the last three quarters of 2023, the Canadian economy is showing a bit more of a pulse so far this year,” BMO chief economist Doug Porter said in a note to clients Friday morning.
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The Bank of Canada will be analyzing GDP results, alongside fresh data on inflation and the jobs market, as it weighs where to take its benchmark interest rate next after an initial 25-basis-cut earlier this month.
Andrew Grantham, senior economist at CIBC, said in a note to clients Friday morning that the solid GDP report puts the Canadian economy on pace for 1.8 per cent annualized growth in the second quarter, marginally outpacing the Bank of Canada’s expectations.
But he said that the upcoming inflation and jobs reports will have a bigger say in whether the central bank delivers a second consecutive rate cut at its next decision on July 24.
Porter said that growth remains “generally lacklustre” across Canada.
He expects that will mean further rises in the unemployment rate and easing in underlying inflation heading forward, setting up the Bank of Canada for further interest rate cuts “eventually.” BMO expects the next rate cut to come at the central bank’s September meeting.
An updated economic outlook from Deloitte Canada released this week called for two more rate cuts this year with the pace of easing picking up in 2025.
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