Canadian real GDP grew 0.3 per cent in April, following close to zero change in March. The growth was driven equally by goods (+0.3 per cent) and services (+0.3 per cent), as well as a rebound in wholesale trade (+2 per cent), manufacturing (+0.4 per cent), and mining, quarrying, and oil and gas extraction (+1.8 per cent). Residential construction activity fell by 2.3 per cent as higher interest rates eroded profitability for new projects. The sector is now nearly 24 per cent below its peak in April 2021. Cooler home sales caused GDP from offices of real estate agents and brokers to fall 2.5 per cent from the prior month. Preliminary estimates suggest that output in the Canadian economy grew by 0.1 per cent in May.

Canada's economy expanded at a reasonable rate that matched analyst expectations in April, following an unexpected jump in inflation last Tuesday. The GDP release caused little change in market expectations of a rate cut in July, which markets are currently pricing at close to 50-50 odds. The Bank of Canada will be watching next Friday's jobs report as the last major piece of information before it decides whether to cut or hold rates at its next meeting on July 24th. Regardless of whether the Bank cuts in July, markets are anticipating a gradual decline in the overnight rate throughout the rest of the year and into 2025. 

Copyright British Columbia Real Estate Association. Reprinted with permission.