The Bank of Canada expects a considerably weaker domestic growth in the second quarter and today's GDP data validate this scenario. Economic activity contracted 0.1 percent in April, proving weaker than the 0.1 percent increase expected by forecasters in an Econoday survey. March GDP growth was revised up to 0.2 percent.

No immediate relief is likely as the advance estimate points to a 0.1 percent GDP contraction in May.

Overall, 10 of 20 industrial sectors expanded in April, nine of which in the services sector.

The monthly decline was led by a 0.6 percent drop in goods-producing industries, half of which explained by a 1.9 percent plunge in manufacturing, the largest decrease since April 2021. Tariff tensions are taking a toll on the sector, with uncertainty driving down motor vehicle production and exports of cars and light trucks. Durable manufacturing fell 2.2 percent and nondurable 1.6 percent.

Other key goods-producing industries were generally flat, except construction, which inched up 0.1 percent on the month.

Energy was down 0.4 percent on the month and industrial production down 0.9 percent.

Services expanded at a steady pace of 0.1 percent in April, with nine of 15 services sectors posting gains. Public administration (0.8 percent), arts, entertainment and recreation (2.8 percent), and finance and insurance (0.7 percent), which benefited from stronger financial investment activity, led services up in April. These gains were partly offset by a 1.9 percent drop in wholesale trade, the largest since June 2023, with motor vehicles and parts being the biggest detractor.

Looking ahead, advance estimates point to a decline in mining, quarrying, and oil and gas extraction in May after being flat in April. Public administration and retail trade also likely contracted in May after rising 0.4 percent in April.

Real estate and rental and leasing, by contrast, is set to expand further after edging up 0.1 percent in April.

Following today's GDP data, Econoday's Relative Performance Index fell into negative territory, signaling the economy is performing less strongly than market expactations.

Growth stalled in April after surging on front-running tariffs in Q1. The consensus agrees with the Stats Canada estimate of up 0.1 percent in April. Sectors exposed to US tariffs got whacked in April.

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.

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.