Canadian economic growth rebounded in April, but early indications suggested it failed to maintain the momentum into May.
Statistics Canada said Friday real gross domestic product grew 0.3% in April — matching its initial estimate for the month — after remaining essentially unchanged a month earlier.
However, the agency’s early reading for May suggested the pace of growth did not continue and slowed to 0.1% for the month.
BMO chief economist Doug Porter said growth on balance was holding up a touch better than widely expected in 2024, but remained generally lacklustre.
“For the Bank of Canada, this doesn’t change much, as growth is still a bit below potential, which likely means some further backup in the unemployment rate and some further moderation in underlying inflation,” Porter wrote in a report.
“As long as the latter holds true, more rate cuts are coming, eventually. We continue to look for the next move in September.”
The Bank of Canada cut its key interest rate target earlier this month for the first time since the early days of the pandemic and while it is expected to cut its key interest rate again, the timing is uncertain.
Statistics Canada reported inflation ticked higher in May to 2.9% compared with 2.7% in April, a result that prompted changes on the financial markets to suggest that expectations of a rate cut in July were lower.
The growth in the economy in April came as 15 of 20 sectors grew for the month with both goods-producing and services sides of the economy showing growth.
Services-producing industries grew 0.3% with the wholesale trade industry up 2% in April. Retail trade also gained 0.5% for the month.
The arts, entertainment and recreation industry posted an increase of 0.9%, while accommodation and food services gained 1.2%. The finance and insurance industry added 0.4%.
Meanwhile, goods-producing industries posted growth of 0.3% as mining, quarrying and oil and gas extraction rose 1.8%.
The manufacturing sector grew by 0.4% in April, while the construction industry fell 0.4%.