Canada’s economy grows 0.3% in April

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Canada’s economy grew by 0.3 per cent in April, primarily pushed by mining, wholesale commerce, the oil and gas industry and manufacturing, Statistics Canada stated Friday.

On an annual foundation, the economy grew by 1.1 per cent in comparison with April 2023.

After struggling to develop in any respect by way of the final three quarters of 2023, the Canadian economy is exhibiting a bit extra of a pulse up to now this yr,” Bank of Montreal chief economist Douglas Porter stated in a word on Friday. “On balance, growth is holding up a touch better than widely expected in 2024, but remains generally lacklustre.”

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Manufacturing grew by 0.4 per cent after retracting 0.6 per cent in the primary quarter of this yr. Retail commerce additionally improved, growing 0.5 per cent following two consecutive months of decline.

The oil and fuel sector, which grew by 1.2 per cent in April, could have obtained a lift forward of the opening of the Trans Mountain pipeline enlargement on May 1.

Construction and the real estate activity, nevertheless, decreased. Residential constructing building was down by 2.3 per cent, its largest decline since May of final yr.

The Canadian economy grew by an annual charge of 1.7 per cent through the first quarter, lower than the Bank of Canada‘s forecast of 2.8 per cent.

This lower-than-expected GDP growth, in addition to downward-trending core inflation data, paved the way for the central bank in June to make its first interest rate cut in four years, bringing the overnight rate down to 4.75 per cent from five per cent. However, data released after the decision showed inflation rising slightly in May to 2.9 per cent from 2.7 per cent reported in April, calling into question whether another cut would follow in July.

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Speaking to reporters on Monday, Bank of Canada governor Tiff Macklem said the Canadian economy appears to be headed towards a “soft landing” and is confident that inflation will return to its two per cent target and that growth will continue to rebound from last year.

Preliminary estimates by Statistics Canada put growth in May at 0.1 per cent. This number may change when the official numbers are released in July.

Economists are now predicting the economy will grow at an annual rate of 1.8 per cent in the second quarter, slightly above the 1.5 per cent annual growth the Bank of Canada predicted in its monetary policy report in April.

“Growth within the Canadian economy was good, but not great, over the spring, particularly when viewed in the context of a strong labour force and population growth,” CIBC Capital Markets economist Andrew Grantham said in a note on Friday. “We continue to view next week’s employment information, and subsequent month’s CPI figures, as extra necessary in figuring out whether or not the Bank of Canada will trim rates of interest by an extra 25 foundation factors on the late-July assembly.”

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Economists at the moment are predicting slower inhabitants development in 2024, after Canada had record-setting inhabitants beneficial properties final yr.

“Steady job growth and robust population gains have been one of the main factors helping lift the economy,” Pedro Antunes, chief economist of the Conference Board of Canada, and his colleague Victor Cicman stated in a launch on Friday. “However, GDP per capita has seen a decline for six of the past seven quarters.”

They predict that the slowdown in inhabitants development, mixed with continued monetary stress on customers, means financial coverage could have an much more substantial affect on Canadian households.

• Email: jgowling@postmedia.com

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