Canadian Economy Expanded 0.3% in April; Another Gain Seen in May

Canada’s GDP increased by 0.3% in April, matching market expectations, driven by rebounding in sectors like wholesale trade and manufacturing. The economy is expected to expand further in May, as predicted by analysts polled by Reuters. 

The growth in April was the fastest since January’s 0.5%, driven by rebounds in wholesale trade, mining, quarrying, and oil and gas extraction and manufacturing sectors. In a preliminary estimate for May, Statscan said GDP was likely up 0.1%, partly offset by decreases in retail trade and wholesale trade. The data could be revised when the next GDP numbers are announced on July 31. 

Andrew Grantham, senior economist at CIBC Capital Markets, noted that the slowing in May GDP growth suggests that the reaccelerating in inflation reflects supply issues or volatility in the data, rather than demand pressures. The Canadian economy is on track to exceed the Bank of Canada’s second quarter annualized growth forecast of 1.5%.

The Canadian dollar strengthened 0.11 per cent against the US dollar in April, indicating a potential pause in rate cuts in July. The Canadian dollar recorded growth in 15 out of 20 sectors, with retail trade being a top contributor. Construction, real estate, and rental and leasing also impacted growth. Both goods-producing and services-producing industries grew by 0.3% in April. 

The central bank trimmed its key policy rate for the first time in over four years in June and said more cuts were likely if inflation continued to show a sustainable path back down to the 2-percent target.

Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Statistics Canada

Canadian Retail Sales Rose 0.7% to $66.8-Billion in April

Canadian retail sales rose 0.7% to $66.8 billion in April, driven by higher sales at gasoline stations and food and beverage retailers. However, Statistics Canada added that its advance estimate for retail sales in May pointed to a decline of 0.6 per cent, though it cautioned the figure would be revised.

The overall trend in spending indicates softness, with the three-month average growth rate barely moving into positive territory in April and then reverting back in May. 

The motor vehicle and parts dealers group posted the largest drop in April, falling 2.2%, while sales at new car dealers fell 2.9%. Core retail sales, which exclude gasoline stations and fuel vendors, rose 1.4% in April. Food and beverage retailers saw a 1.9% increase, while clothing and clothing accessories retailers saw a 2.1% increase. 

The sporting goods and miscellaneous sub-sector saw a 3.4% increase. Building material and garden equipment and supplies dealers saw a slight decrease of -1.4% from March to April 2024, but but remained flat with 0% increase year over year.

In volume terms, retail sales in April gained 0.5%. The Bank of Canada recently cut its key interest target by a quarter of a percentage point to 4.75%, marking the first time the central bank lowered its policy rate since March 2020 during the early days of the pandemic.

Source: Globe and Mail
Source: The Star
Source: Statistics Canada