Canada GDP beats forecasts with 0.5% growth in April

Investing.com -- Canada’s economy rebounded sharply in April as real gross domestic product expanded by 0.5%, according to data from Statistics Canada, beating consensus economist expectations of 0.4% and reversing a 0.1% contraction in March. The robust turnaround was characterized by broad-based strength, with 14 of the nation’s 20 industrial sectors expanding as both goods-producing and services-producing industries posted gains.

Goods-producing industries surged 1.2% in April, driven heavily by a 2.9% jump in the mining, quarrying, and oil and gas extraction sector, which marked its largest growth rate since February 2024. Oil sands extraction led the resource rally with a 6.6% expansion as facilities bounced back from prolonged, unscheduled maintenance that had restricted production early in the year.

The services-producing sector grew 0.3% in April, marking its third consecutive monthly increase on steady gains within the public sector, transportation, and warehousing. The public sector aggregate expanded 0.4% due to widespread increases across all branches, with public administration contributing the most through a 0.7% increase across all levels of government.

Manufacturing and construction also staged notable turnarounds, with the manufacturing sector rising 0.6% on a 1.1% expansion in durable goods, led by machinery and wood product manufacturing. Meanwhile, the construction sector grew 0.7% to break a four-month losing streak, pushed higher by a 1.3% increase in residential building improvements and multi-unit projects.

Transportation and warehousing advanced 0.9% in April, driven by a 3.8% rebound in rail transport and a 2.6% increase in pipelines as first-quarter operational disruptions eased. Additionally, finance and insurance grew 0.4% on strong mutual fund and deposit activity, while real estate ticked up 0.2% due to a resurgence in home resales within the Greater Toronto Area.

An advance estimate indicates that real GDP by industry edged up an additional 0.1% in May, as finance and real estate gains were partially offset by declines in wholesale trade and agriculture. This preliminary data places early tracking for second-quarter annualized growth at roughly 2.5%, notably higher than the Bank of Canada’s Monetary Policy Report projection of 1.5%.

CIBC Economist Andrew Grantham noted that "today’s data shows the Canadian economy sprang back to life early in the second quarter," delivering the sharpest monthly gain in almost a year. Grantham added that while growth was flattered by the temporary oil and gas rebound, the broad-based sector gains support CIBC’s forecast of no change to the central bank’s overnight rate this year.

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