The lacklustre 0.1% gain in real GDP in April may have fallen short of expectations, but economists said Wednesday they don’t expect the bigger picture to change much.
Economists had been calling for a jump of 0.03% or 0.4% in real gross domestic product, but weakness in retail trade, public sector, tourism and recreation industries took the wind out of the economy’s sails, as did a surprising drop in manufacturing, which was off 0.2% after a 1.6% jump the prior month.
In particular, Statistics Canada noted that activity in the month was dampened significantly by public sector strikes in Newfoundland & Labrador and British Columbia, and to a lesser extent, a labour dispute in the gambling industry along with maintenance shutdowns at a number of paper mills.
The good news was that the gain in March was revised up to a strong 0.8% reading from 0.7%.
Economists said they are holding to their predictions for the second quarter.
“Still, even with the modest gain in April, GDP has fired up at a 3.6% annual rate in the past three months and is up 2.9% from year-ago levels, nearly matching the Bank of Canada’s estimate of potential GDP growth,” said Sherry Cooper, chief economist at BMO Nesbitt Burns Inc.
Derek Burleton, senior economist at TD Bank Financial Group, offered a similar outlook. The March and April figures “leave the pace of growth in Canada’s economy well on track to reach a heated clip of 4% (annualized) in the second quarter as a whole,” he said in a report.
Warren Lovely of CIBC World Markets said the bank is sticking to its second quarter forecast of growth of 4% to 4.5%. “ Monthly growth has been struggling to find a groove of late, with soft results sandwiched around a huge March,” he said in a report. “But with that hefty March increase providing such a great lead-in to Q2, April’s tame result doesn’t really derail our outlook for the second quarter.”