(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 per cent 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 is holding up a little better than expected in 2024, but remains generally lackluster.
“For the Bank of Canada, this does not change much, because growth is still a little below its potential, which probably means a further rise in the unemployment rate and a further moderation in underlying inflation” , Mr. Porter wrote in a report.
“As long as the latter assumption holds, further rate cuts will eventually come. We still anticipate the next cut 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%, up from 2.7% in April, a result that dampened financial market expectations of a 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 trade also gained 0.5% for the month.
The arts, entertainment and recreation sector posted a 0.9% increase, 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 0.3%, with mining, quarrying, and oil and gas extraction increasing 1.8%.
The manufacturing sector grew 0.4% in April, while the construction sector slipped 0.4%.