Find out how the economy is faring
Canada’s economy expanded by 0.3% in April amid a rebound in several industries – but likely slowed to a growth pace of 0.1% in May, according to new data released on Friday.
Statistics Canada said gross domestic product (GDP) is likely to jump 1.8% in the second quarter if June output is unchanged, slightly above Bank of Canada and economists’ expectations but probably not enough to steer the central bank away from further rate cuts in 2024.
The data showed 15 of 20 sectors grew in April with manufacturing, oil and gas extraction, and wholesale trade all posting strong performance. Construction, meanwhile, saw a 0.4% slowdown as residential building activity cooled.
The GDP report showed the momentum from output gains in April “quickly faded” in May, RBC economist Claire Fan said in a note, with the economy’s excess supply giving it space to grow without worsening inflation pressures.
That points to the Bank of Canada continuing on a rate-cutting path, she said, with a potential further 75 basis points’ worth of cuts on the way before the end of the year.
“Even then, interest rates will still remain at levels high enough to restrict growth in the economy for some time,” she said, “and we don’t expect per-capita GDP will return to positive territory until Q4 this year.”
StatCan’s latest economic indicator arrives shortly after it said inflation came in at a pace of 2.9% last month, marking an unexpected uptick – but one that still leaves the consumer price index (CPI) within the Bank of Canada’s target range of 1-3%.
