The Canadian economy has recovered after a slow end to the first quarter, Statistics Canada said on Friday.
Real gross domestic product (GDP) rose 0. 3% in April, the company reported, in line with its initial estimates. Early expectations were that the expansion would continue in May, although it would slow to a rate of 0. 1%.
Wholesale trade, mining, quarrying, and oil and fuel production and extraction all rose in the month, StatCan said. The arts, entertainment and recreation sectors also received support through 4 Canadians competing for the Stanley Cup when the NHL playoffs began this month. the firm noted.
Construction activity declined in the month following the sector’s highest construction since October 2022 in March. A slowdown in the construction of new single-family and multi-family homes, as well as housing renovations, contributed to the decline, StatCan said.
April’s numbers are higher than March’s stagnant growth, as the Canadian economy got off to a strong start in 2024 but showed signs of decline until the end of the first quarter. Canada has also narrowly moved away from a technical recession in 2023 as major interest rates weighed on growth.
“After struggling to grow in the final three quarters of 2023, the Canadian economy is showing a bit more momentum this year,” BMO chief economist Doug Porter said in a note to consumers Friday morning.
The Bank of Canada will analyze GDP results, as well as new inflation and labor market data, as it determines where to set its benchmark interest rate after an initial 25 basis point cut earlier this month.
Andrew Grantham, senior economist at CIBC, said in a note to clients on Friday morning that the strong GDP report puts the Canadian economy on track for a 1. 8 per cent annualized expansion in the second quarter, topping expectations. expectations of the Bank of Canada.
But he added that upcoming inflation and employment reports will have a greater effect on whether the central bank will make a second consecutive rate cut in its next resolution on July 24.
Porter said expansion remains “generally lackluster” across Canada.
He expects this to result in an increase in the unemployment rate and a slowdown in core inflation in the future, leading to additional interest rate cuts by the Bank of Canada “over time. ” BMO expects the next rate cut to come at the central bank’s September meeting.
An update to Deloitte Canada’s economic outlook released this week calls for two more cuts this year, with the speed of easing set to accelerate in 2025.