Oil rebound drives Canada’s best 2-month GDP gain since 2017

Key insights

• It’s the first GDP print of the second quarter, and depicts an economy showing clear signs of a rebound after stalling at the end of last year and the beginning of 2019.
• Even without any more growth in May and June, the April number puts the economy on track for at least a 2% gain on an annualized basis in the second quarter. That would be well above the Bank of Canada’s projection for 1.3% annualized growth, keeping pressure off the central bank to match any easing trend in other advanced economies.
• It was largely an oil story in April, as the Alberta government eased curtailments on production. Excluding the mining, oil and gas sectors, Canadian GDP was flat on the month.

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• The gains weren’t particularly broad-based. Eleven out of 20 sectors recorded higher output, driven by a 4.5 percent gain in mining, oil and gas. Oil-sands extraction jumped 11%.
• One major pocket of weakness was manufacturing, which contracted 0.8% in April — the biggest one-month drop in almost two years. That was led by a sharp contraction in motor vehicle production, which Statistics Canada said reflected temporary shutdowns.
• The recovery in the construction sector continued in April, with output up 0.2%. That’s the third gain in four months.
• Professional services and accommodation continued to grow, holding on to their status as the two fastest growing sectors over the past year.

(By Theophilos Argitis)