Canadian GDP off to a strong start in Q2 but trade uncertainty continues – RBC
RBC Economics highlights a firmer start to Q2 in today’s Canadian GDP report after a small contraction in the first quarter of the year.
Canadian economic activity increased 0.5% in April, slightly higher than Statistics Canada’s 0.4% advance estimate, which was also the consensus view. The May advance reading was +0.1%.
RBC writes:
As expected, the increase was driven primarily by stronger activity in goods-producing industries, particularly mining, quarrying, and oil and gas extraction, alongside a pickup in manufacturing output. Service-producing industries also expanded, though at a more moderate pace.
RBC highlights that trade will continue to be a drag as the USMCA countries intensify negotiations around tweaks to the agreement. The small advance gain in May matches with what RBC is seeing.
Manufacturing and home resales strengthened in May, with the latter posting its largest monthly increase since October 2024. Those gains were partly offset by weaker wholesale activity, suggesting trade-related headwinds continued to weigh on parts of the goods sector. That said, as-reported today’s data is tracking some upside risk to our forecast for a 1.7% (annualized QoQ) increase in Q2.
They highlight other May data that has shown. Manufacturing sales rose 1.1%, led by motor vehicle production in the month and home resales increased 5.1%, the strongest monthly gain since October 2024. Total hours worked rose 0.6%, highlighting resilience int he jobs picture.
The loonie had a rough start to the year but is flat today at 1.4200.
Wednesday is a holiday in Canada so markets will be closed and Canadian dollar trading will be light.
This article was written by Adam Button at investinglive.com.