- GDP rose 0.3% in April (expectations +0.1%)
- Mining, oil and gas was up 4.5%
- GDP ex-mining, oil and gas increased by 0.1%
Today’s GDP report showed further easing in some of the key headwinds that weighed on Canada’s economy in the last two quarters—namely a slowdown in the energy sector and housing. In fact, the mining, oil and gas industry saw one of its strongest monthly increases in recent years as output ramped up alongside higher production limits in Alberta. The increase in April GDP, coming on the heels of a 0.5% gain in March, leaves Q2 growth tracking north of 2% (vs. 0.3% annualized in Q4/18-Q1/19). This return to above-trend growth is happening somewhat sooner than the BoC thought—they’ll likely revise up their Q2 forecast (last at 1.3%) on July 10.
The key question is whether rising trade tensions and a softer global outlook will result in downward revisions to domestic growth over the second half of the year. The BoC’s Business Outlook Survey (to be released today at 10:30 ET) will help determine how Canadian firms are dealing with growing external risks. A further decline in business sentiment (following Q1’s sharp deterioration) would certainly temper the BoC’s enthusiasm about stronger Q2 GDP.
