Canada’s Economy Continues Growing

Canadian Economics

  • Real gross domestic product (GDP) increased 0.3 per cent in April, after a flat reading last in March. Rebounds in several industries contributed to the gain, as 15 of 20 subsectors increased in the month. The advanced estimate indicates that real GDP increased by 0.1 per cent in May.
  • Services-producing industries rose by 0.3 per cent in April, with nearly all sub sectors seeing growth. Wholesale trade expanded 2.0 per cent in April, which more than offset the decrease in the previous month. Gains in the sector were led by motor vehicle and parts wholesaling, which rose an impressive 8.0 per cent. This was the segment’s largest monthly growth rate since October 2021.
  • Finance and insurance increases for the second time in three months. Volatility in financial markets such as ongoing geopolitical tensions as well as uncertainty regarding interest rate announcements led to higher-than-normal activity in April. The sector rose by 0.4 per cent. Elsewhere in services, retail trade was a strong supporter of growth following two consecutive monthly decreases.
  • Goods-producing industries also rose by 0.3 per cent in April. The manufacturing sector saw the largest gains, expanding 0.4 per cent. This was after two consecutive months of decline. The durable goods segments contributed the most to growth, rising by 0.6 per cent combined, with transportation equipment driving the gain.
  • Mining, quarrying, and oil and gas extraction was also a leading sector, rising by 1.8 per cent in April. The oil sands extraction sector led the charge, expanding 2.1 per cent, led by higher synthetic crude production and crude bitumen extraction in Alberta. Support activities for mining and oil and gas extraction also supported the gain.
  • The arts, entertainment and recreation sector expanded by 0.9 per cent, increasing for the second consecutive month in April. Interestingly, increase in spectator sports helped push up the sector as four Canadian hockey teams qualified for the National Hockey League playoffs that started in the second half of the month.


Today’s release of GDP estimates shows that Canada’s economy began the second quarter with moderate growth of 0.3 per cent, an improvement over last month’s flat reading. The economy has shown growth in three of the last four months, marking a stronger performance compared to the latter half of 2023. Robust population gains have been one of the main factors helping lift the economy. However, GDP per capita has seen a decline for six of the past seven quarters. On the flip side, population growth has also helped mitigate inflationary pressures by expanding the labour market. Looking ahead, as population growth slows and consumers remain financially stretched, monetary policy will take on a more substantial role.

Last month, the Bank of Canada cut rates for the time since beginning its inflation management strategy in March 2022, as growth in the CPI reached levels not seen in decades. With inflation broadly trending downward and the unemployment rate increasing to 6.2 per cent in May, the Bank deemed that interest rate adjustments were achieving their intended effects, prompting them to cut their policy interest rate by 25 basis points. The good news is that consumers and businesses will start to see relief in their pocketbooks, helping to lift the economy in the latter half of the year.

However, the extent of future rate cuts remains uncertain and will depend on several factors.  Statistics Canada’s inflation reading for May saw year-over-year CPI rise by 2.9 per cent, up from 2.7 per cent in April. The results cast further doubt on how quickly the Bank will reach its 2 per cent target, ultimately impacting the pace of interest rate reductions. Moreover, the Bank will likely consider aligning its actions closely with the Federal Reserve, which has postponed its own rate cut until at least September.

To learn more about Canada’s economic outlooks for the long-term or the next five year’s, please consult our Canadian Five-Year Outlook.