Canada’s GDP grew by 1.7% in 1st quarter

Spending by Canadian households helped the economy grow at an annualized rate of 1.7 per cent in the first three months of the year, Statistics Canada said Friday.

Household spending on services rose 1.1 per cent, boosted by spending on telecommunications services, rent and air travel, while household spending on goods gained 0.3 per cent, helped higher by spending on new trucks, vans and sport utility vehicles.

The results for the first quarter came as Statistics Canada said real gross domestic product was essentially unchanged in March, following growth of 0.2 per cent in February.

The reading of the economy comes ahead of the Bank of Canada’s interest rate decision set for next week.

Rate cut hangs in balance

Bank of Canada governor Tiff Macklem has said a rate cut is within the realm of possibilities, but that the decision will be driven by the economic data.

He has said the central bank is seeing the right conditions to begin lowering its policy rate from five per cent, but that he wants to see those conditions sustained to ensure inflation is heading down to the bank’s two per cent target.

The annual inflation rate fell to 2.7 per cent in April compared with 2.9 per cent in March.

The March GDP figure came as the construction industry gained 1.1 per cent for the month, its strongest growth rate since January 2022. Meanwhile, the manufacturing sector fell 0.8 per cent, weighed down by retooling work at multiple automotive assembly plants in Ontario.

The agency said its preliminary estimate for the economy in April points to growth of 0.3 per cent as increases in manufacturing, mining, quarrying, and oil and gas extraction and wholesale trade were partially offset by decreases in utilities.

Statistics Canada also revised its reading for growth in the fourth quarter of 2023 down to an annualized rate of 0.1 per cent, compared with its initial report of an annualized rate of one per cent.