The Canadian economy has recovered after a slow end to the first quarter, Statistics Canada announced Friday.
Real gross domestic product (GDP) rose 0. 3% in April, the company said, in line with its initial estimates. Early expectations are that the expansion will continue in May, albeit slow at a rate of 0. 1 consistent with the cent.
Wholesale trade, mining, quarrying, and oil and fuel production and extraction increased 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. noted the firm.
Meanwhile, construction activity fell in the month following the sector’s biggest increase since October 2022 in March. Contributing to the drop were slowdowns in the construction of new single-family and multi-family homes, as well as home renovation work, according to StatCan.
April’s figures 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 shrunk away from a technical recession in 2023 as the main 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, beating Bank of Canada expectations.
But he added that upcoming inflation and employment reports will have a bigger effect on whether the central bank will make a second direct rate cut the next time it makes a decision on July 24.
Porter said expansion remains “generally lackluster” across Canada.
He expects this to lead to an increase in the unemployment rate and a slowdown in core inflation in the future, leading the Bank of Canada to lower interest rates further “eventually. ” ‘interest. 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 calls for two more rate cuts this year, with the speed of easing set to accelerate in 2025.