Canadian economic output rebounded sharply after spending a month in negative territory. Statistics Canada (StatCan) data shows gross domestic product (GDP) ripped higher in April. The surge wasn’t a sign of an economy back to healthy growth though, as temporary factors and public sector spending was behind most of the boost.
Canadian GDP Rebounded In April After The March Contraction
Seasonally adjusted GDP climbed 0.5% in April, following a 0.1% drop in March. It was enough to slightly accelerate annual growth to 1.1%, with broad growth observed in 14 of 20 sectors. Producers saw the biggest growth with 1.2% m/m growth, while services climbed a more modest (and typical) 0.3%.
The headline data certainly wasn’t representative of what’s anticipated after a quarterly technical recession. These numbers make a lot more sense once we look under the hood.
Oil, Gas and Government Did The Heavy Lifting
Source: StatCan.
While 14 of 20 sectors grew in April, oil & gas and government spending did the heavy lifting. Mining, quarrying, and oil and gas rose 2.9% in the month, providing the majority of last month’s growth—5x more than the second largest contributor.
Public administration grew 0.7% in April, enough to reverse the prior declines and print 0.5% annual growth. Construction (+0.7%) and manufacturing (+0.6%) rounded out the biggest growth segments.
Real estate, rental, and leasing (+0.2%) underperformed total GDP in April, though it outperformed with 1.7% annual growth. StatCan notes this was largely due to rising revenues for real estate agents and brokers, reflecting stronger resale activity in the GTA.
StatCan’s Preliminary Data Shows Growth Is Already Fading
The momentum is already fading, according to StatCan’s advance estimates. The agency’s preliminary numbers show just 0.1% growth in May, led by finance and insurance, and real estate, rental, and leasing. The drag is largely forecast to be in production, with wholesale inventories and agriculture seeing some friction.
April’s growth story isn’t one of private-sector acceleration. Oil surged, government spending picked up, and construction and real estate got a policy boost. Most growth was fueled by geopolitical events boosting oil, and public debt. That’s neither sustainable nor under control—a problem already showing in preliminary data.
