(Ottawa) Canadian economic growth rebounded in April, but early indications suggest it failed to maintain its momentum through May.
Statistics Canada reported Friday that real gross domestic product rose 0.3% in April — matching its initial estimate for the month — after remaining essentially unchanged a month earlier.
However, early May figures from the agency suggest the pace of growth has not continued and has slowed to 0.1% for the month.
BMO chief economist Doug Porter said growth, overall, was holding up a little better than expected in 2024, but remained generally lackluster.
“For the Bank of Canada, this doesn’t change much, as growth is still a little below potential, which likely means a further rise in the unemployment rate and a further moderation in core inflation.” , Mr. Porter wrote in a report.
“As long as the latter remains true, more rate cuts will eventually come. We are still anticipating the next reduction in September,” he added.
The Bank of Canada cut its key interest rate earlier this month for the first time since the early days of the pandemic and while it is expected to cut the rate again, the timing is uncertain.
Statistics Canada reported that annual inflation in May was 2.9%, compared to 2.7% in April, a result that weakened financial markets’ expectations of a policy rate cut in July.
The economy’s growth in April occurred as 15 of 20 sectors advanced during the month and both goods-producing and service-producing industries contributed to the growth.
Service-producing industries grew 0.3%, with the wholesale trade sector jumping 2% in April. Retail also gained 0.5% for the month.
The arts, entertainment and recreation sector posted an increase of 0.9%, while the accommodation and food services sector gained 1.2%. The finance and insurance sector added 0.4%.
During the same period, goods-producing industries grew by 0.3%, with mining, quarrying, and oil and gas extraction growing by 1.8%.
The manufacturing sector grew 0.4% in April, while the construction sector slipped 0.4%.
