| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | 0.2% | 0.0% | 0.0% | 0.1% |
| Year over Year | 1.7% | 1.7% | 1.8% |
Highlights
Canadian growth stalled in April after edging up 0.1 percent in March, the worst reading since contracting 0.1 percent last December. The performance was weaker than expected, confirming the slowing momentum since February. However, May could reverse the slowing trend as the advance estimate is 0.4 percent.
GDP expanded 1.7 percent year-over-year in April, down from 1.8 percent in March.
Overall, 11 of 20 industries were flat or down on the month and 9 posted gains. Services were flat for the third consecutive month, while goods-producing industries managed to increase 0.1 percent month-over-month after 0.3 percent in March.
Within services, wholesale trade contracted 1.4 percent, management of companies and enterprises was down 2.2 percent, and finance and insurance down 0.2 percent. The public sector decreased 0.3 percent, the first decline since January 2022 as strikes by federal workers reduced activity in federal government public administration (excluding defense); public administration fell 1.0 percent, the largest drop since April 2020. Meanwhile, educational services and health care and social assistance remained flat.
On the upside, growth in real estate and rental and leasing accelerated for the third consecutive month, to 0.5 percent in April, the fastest pace since December 2020, from 0.3 in March and 0.2 percent in February. Activity at real estate agents and brokers and activities related to real state rose 8.6 percent, the largest gain since July 2020 despite higher mortgage rates.
Within goods-producing industries, declines of 0.6 percent in manufacturing and 0.8 percent in agriculture, forestry, fishing and hunting were offset by gains of 0.4 percent in construction and 1.2 percent in mining, quarrying, and oil and gas extraction.
In May, the advance estimate points to a rebound in manufacturing, wholesale trade, and public administration, as well as further gains in offices of real estate agents and brokers. Meanwhile, the mining, quarrying, and oil and gas extraction sector, as well as the utilities contracted.
Today's weaker-than-expected GDP brought Econoday Consensus Divergence Index down to 26. However, such reading remains consistent with an economic performance that is appreciably stronger than expected and should only bring limited relief to the Bank of Canada, especially since the advance estimate points to a reversal in May. In addition, housing sectors construction, real estate, and rental and leasing showed resilience in the face of higher interest rates.
In its April Monetary Policy Report, the Bank of Canada projected an annualized GDP growth rate of 1.0 percent for the second quarter, a sharp slowdown from the higher-than-expected 3.1 percent first quarter estimate released May 30 by Statistics Canada. On June 7, the BoC, which had projected a 2.3 percent GDP growth for the first quarter, concluded that monetary policy wasn't restrictive enough, leading to a 25 basis point rate hike that brought the policy rate to 4.75 percent.
GDP expanded 1.7 percent year-over-year in April, down from 1.8 percent in March.
Overall, 11 of 20 industries were flat or down on the month and 9 posted gains. Services were flat for the third consecutive month, while goods-producing industries managed to increase 0.1 percent month-over-month after 0.3 percent in March.
Within services, wholesale trade contracted 1.4 percent, management of companies and enterprises was down 2.2 percent, and finance and insurance down 0.2 percent. The public sector decreased 0.3 percent, the first decline since January 2022 as strikes by federal workers reduced activity in federal government public administration (excluding defense); public administration fell 1.0 percent, the largest drop since April 2020. Meanwhile, educational services and health care and social assistance remained flat.
On the upside, growth in real estate and rental and leasing accelerated for the third consecutive month, to 0.5 percent in April, the fastest pace since December 2020, from 0.3 in March and 0.2 percent in February. Activity at real estate agents and brokers and activities related to real state rose 8.6 percent, the largest gain since July 2020 despite higher mortgage rates.
Within goods-producing industries, declines of 0.6 percent in manufacturing and 0.8 percent in agriculture, forestry, fishing and hunting were offset by gains of 0.4 percent in construction and 1.2 percent in mining, quarrying, and oil and gas extraction.
In May, the advance estimate points to a rebound in manufacturing, wholesale trade, and public administration, as well as further gains in offices of real estate agents and brokers. Meanwhile, the mining, quarrying, and oil and gas extraction sector, as well as the utilities contracted.
Today's weaker-than-expected GDP brought Econoday Consensus Divergence Index down to 26. However, such reading remains consistent with an economic performance that is appreciably stronger than expected and should only bring limited relief to the Bank of Canada, especially since the advance estimate points to a reversal in May. In addition, housing sectors construction, real estate, and rental and leasing showed resilience in the face of higher interest rates.
In its April Monetary Policy Report, the Bank of Canada projected an annualized GDP growth rate of 1.0 percent for the second quarter, a sharp slowdown from the higher-than-expected 3.1 percent first quarter estimate released May 30 by Statistics Canada. On June 7, the BoC, which had projected a 2.3 percent GDP growth for the first quarter, concluded that monetary policy wasn't restrictive enough, leading to a 25 basis point rate hike that brought the policy rate to 4.75 percent.
Market Consensus Before Announcement
After no change in March, GDP in April is expected to rise 0.2 percent.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.
Description
Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
