In May, Canada’s gross domestic product (GDP) is expected to have increased by 0.1%, according to preliminary estimates. This growth was driven by sectors such as manufacturing, real estate, rental and leasing, and finance and insurance, which saw positive growth in April. On the other hand, retail trade and wholesale trade experienced decreases.
Despite this growth, the Canadian economy is still on track to exceed the Bank of Canada’s second quarter annualized growth forecast of 1.5%. In April, 15 out of 20 sectors saw growth, with retail trade contributing to this after two consecutive monthly declines. However, construction, real estate, rental and leasing were among the sectors that weighed on growth in April. Both goods-producing and services-producing industries grew by 0.3% in April.
The Bank of Canada recently cut its key policy rate for the first time in over four years and hinted at the possibility of more cuts if inflation did not reach the target rate of 2%. However, recent inflation data showed an unexpected rise in consumer prices in May, leading to a decrease in expectations for a rate cut in July. The next rate announcement is scheduled for July 24th following which the bank will have more data to inform its decision.
In conclusion, while Canada’s GDP has shown signs of growth in recent months, it remains uncertain whether this momentum will continue or if there are any potential roadblocks ahead.