In April, Canada’s gross domestic product (GDP) rose by 0.3%, beating market expectations. The growth was driven by sectors such as manufacturing and wholesale trade, which rebounded from zero growth in March. This was the fastest increase since January, with the mining, quarrying, oil and gas extraction, and manufacturing industries leading the way.
Preliminary estimates for May suggest that GDP may have increased by 0.1%. Sectors like real estate, rental and leasing, finance and insurance saw growth while retail trade and wholesale trade experienced declines. This puts Canada’s economy on track to exceed the Bank of Canada’s second quarter annualized growth forecast of 1.5%.
In April, 15 out of 20 sectors saw growth, with retail trade contributing to this after two consecutive monthly declines. Construction, real estate, rental and leasing were among the sectors that weighed on growth in April. Both goods-producing and services-producing industries grew by 0.3% in April.
The Bank of Canada recently cut its key policy rate for the first time in over four years and hinted at the possibility of more cuts to come if inflation did not reach its target rate of 2%. However, recent inflation data showed an unexpected rise in consumer prices in May leading to a decrease in expectations for a rate cut in July. The next rate announcement is scheduled for July 24th following which the bank will have more data to inform its decision.