Canada: Economic activity growth wanes in April; flash estimate points to contraction in May
GDP grew 0.3% in month-on-month seasonally-adjusted terms in April, which was a deterioration from March’s 0.7% increase. Looking at the details of the release, the services sector lost steam on weaker growth in the hospitality industry, while manufacturing and construction also lost pace. In contrast, mining growth picked up.
On an annual basis, monthly GDP increased 5.0% in April, notably above March’s 3.5% expansion and marking the best result since June 2021.
A flash estimate for May estimated a contraction of 0.2%, driven by downturns in mining, manufacturing and construction.
On the reading, TD Economics’ James Orlando said:
“The drop in the flash estimate for May is certainly a worry. Despite May’s flash print being only a preliminary estimate and there is a lot of volatility in the data, there is risk that Canada’s recent outperformance relative to its global peers may be coming to an end. […] the impact of rising interest rates and high inflation will cause a deceleration in Canadian economic growth.”
FocusEconomics analysts project growth of 3.8% in 2022, which is down 0.2 percentage points from last month. In 2023, our analysts see growth easing to 2.2%.