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Canada GDP Q1 2024

Canada: GDP records fastest upturn since Q1 2023 in Q1

GDP growth accelerated to 1.7% in seasonally adjusted annualized rate terms (SAAR) in the first quarter, up from 0.1% in the fourth quarter of last year and marking the strongest growth since Q1 2023. The expansion was below the flash estimate of 2.5%, but almost bang in line with our panelists’ forecasts. The economy lost steam as the quarter progressed, with rapid month-on-month growth in January followed by softer growth in February and stagnation in March.

Household spending growth moderated to 3.0% SAAR in Q1 from a 3.2% expansion in Q4. Public spending, meanwhile, bounced back, growing 2.1% in Q1 (Q4 2023: -2.5% SAAR). Fixed investment grew 2.9% in Q1, contrasting the 5.4% contraction recorded in the previous quarter. On the external front, exports of goods and services increased 1.9% on a SAAR basis in the first quarter, which was below the fourth quarter’s 3.2% expansion. Conversely, imports of goods and services growth picked up to 1.5% in Q1 (Q4 2023: +0.9% SAAR). Finally, inventories subtracted substantially from the headline GDP reading.

A flash estimate indicates that real GDP rose 0.3% in April, as increases in manufacturing, mining, quarrying, and oil and gas extraction and wholesale trade were partially offset by decreases in utilities. Our Consensus is for GDP growth to slow somewhat in Q2 as a whole relative to Q1, though panelists’ projections will likely be revised up in light of the strong April data.

On the outlook, TD Economics’ James Orlando said:

“When we exclude external factors, the Canadian economy grew at its fastest quarterly pace in two years! Will this last? We don’t expect it to. Sure, the flash estimate showed a decent improvement in April, but our tracking of consumer spending points to growth right around trend. This means that the acceleration in consumer spending since late last year appears to be petering out.”

In contrast, Desjardins’ Randall Bartlett seemed more upbeat:

“Looking ahead, the solid monthly real GDP data for April point to another positive print in the second quarter of 2024. We’re currently tracking annualized real GDP growth in the range of 1.5% to 2% in Q2, broadly in line with that forecast by the Bank of Canada in its April 2024 Monetary Policy Report.”

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