Canada’s gross domestic product inched up a modest 0.1 per cent in April after adjusting for inflation, Statistics Canada said today. It was the fourth consecutive month of positive growth but a slowdown from the 0.3 per cent monthly gain recorded on average between January and March.
Growth was mostly in the service sector, which saw aggregate output expand by 0.3 per cent, led by the finance industry and wholesale trade. An abnormally large 3.4 per cent gain in the arts and recreation industry reflected the extended NHL season after a four-month lock-out that ended in January, Statistics Canada noted.
Goods producing industries contracted by 0.3 per cent, largely as a result of a 1.5 per cent drop in the natural resource sector.
Oil and gas extraction activity fell 2.7 per cent in April, after growing at a healthy clip in March (1.7 per cent) and February (1.1 per cent). Output at potash and coal mines declined by 0.6 per cent.
Another source of drag was the construction industry, which recorded a 0.4 per cent dip as building activity in both the residential and commercial real estate market slowed.
What the analysts are saying:
“All said, we anticipate Canadian economic growth to fall below trend,” writes TD’s Francis Fong, who predicts second-quarter GDP growth to come in at 1.6 per cent. That would be considerably below the 2.5 per cent pace of the first three months of the year and slightly more pessimistic than the Bank of Canada’s 1.8 per cent growth forecast for the April-to-June period. Fong, though, predicts that, as the impact of the U.S. automatic spending cuts wanes, a pickup in growth south of the border later this year should translate into a healthier 2-2.5 per cent annualized growth for Canada.
RBC’s Paul Ferley has a more positive take on second-quarter growth, which he pins at 2.1 per cent.
The drop in oil and gas sector activity, says CIBC’s Emanuella Enenajor, potentially reflects production challenges after maintenance at Fort-McMurray, Alta.
TD’s Fong writes that the resource sector slump was “likely impacted by the heavy commodity price correction seen in April.”