Real gross domestic product (GDP) in Canada was essentially unchanged in April, following a slight uptick in March (+0.1 per cent). Goods-producing industries edged up 0.1 per cent, whereas services-producing industries (0.0 per cent) were essentially unchanged. Overall, 11 of 20 industrial sectors posted increases, reported Statistics Canada on Friday.
Kateryna Babaieva
“Advance information indicates that real GDP increased 0.4 per cent in May. Growth was led by the manufacturing and wholesale trade sectors, as well as by offices of real estate agents and brokers. There was also a rebound in federal government public administration (except defence). These increases were partially offset by decreases in the mining, quarrying, and oil and gas extraction sector, as well as the utilities sector. Owing to its preliminary nature, these estimates will be updated on July 28, 2023, with the release of the official GDP data for May,” said the federal agency.
In April, mining, quarrying, and oil and gas extraction (+1.2 per cent) grew in April as all subsectors were up. This was the fourth consecutive month of growth in the sector, said the report.
“Oil and gas extraction (except oil sands) led the growth with a 2.1 per cent expansion in April 2023 following a tepid start to the year. Crude petroleum extraction contributed the most to the increase as increased production off Canada’s North Atlantic coast more than offset lower crude production in the west. Natural gas extraction, led by Alberta, continued to expand, reflecting continued natural gas storage replenishment.
“Oil sands extraction edged down 0.1 per cent, while support activities for mining and oil and gas extraction (+4.6 per cent) grew for the third consecutive month, largely due to increases in both rigging and drilling activity in April.”
StatsCan said the manufacturing sector declined 0.6 per cent in April, down for the first time in four months, as both durable and non-durable goods manufacturing were down in the month.
Marc Ercolao
Marc Ercolao, Economist with TD Economics, saidCanadian GDP surprised to the downside, but details didn’t flash any major warning signs.
“With today’s print and the flash estimate for May, second quarter GDP growth is tracking around a trend pace. This would once again overshoot the Bank of Canada’s (BoC) most recent 1.0 per cent annualized estimate for Q2 growth,” he said.
“The BoC is waiting for a few more key markers before making their policy decision on July 12, notably June jobs data next week. In our view, today’s GDP print doesn’t change the balance of risks towards another quarter-point hike of the policy rate at next meeting–markets are split down the middle on the odds of a hike. We think that ongoing strength in economic activity, a still-tight labour market, and inflation above target tips the likelihood towards a 25 bps hike to 5.00 per cent in July.”
Andrew Grantham
Andrew Grantham, an Economist with CIBC Economics, said a large, albeit temporary, decline in public administration owing to the Federal strike was the biggest drag on growth during the month.
“However, there was also weakness in wholesale and manufacturing as well. Statistics Canada noted that the decline in the wholesale sector was largely due to a normalisation in activity after a number of high-value agricultural supply shipments were made in the prior month. The decline in manufacturing was partly driven by production curtailments in paper manufacturing in BC,” he said.
“Offsetting those drags were positive contributions from real estate and mining, oil & gas. While the increase in real estate activity may raise some eyebrows in a high interest rate environment, it should be noted that the level of activity within real estate agents is still down 17 per cent on a year-over-year basis and lower than in 2019 (despite the demands for housing due to rapid population growth). Another positive contributor to growth in April was air travel (+1.6 per cent), although again the level of activity remains depressed (-30 per cent) compared to the pre-pandemic peak.”
Mario Toneguzzi
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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