Overview
Canada's economy staged a marked rebound in April, with real gross domestic product expanding by 0.5%, according to Statistics Canada. The result exceeded the consensus economist expectation of 0.4% and reversed a 0.1% contraction recorded in March. Expansion in April was widespread, with 14 of 20 industry groups contributing positive growth across both goods-producing and services-producing sectors.
Goods-producing sector recovery
Goods-producing industries rose 1.2% in April, anchored by a 2.9% increase in the mining, quarrying, and oil and gas extraction category. That represented the largest monthly growth rate for the sector since February 2024. The oil sands segment was a notable driver, expanding 6.6% as facilities recovered from extended unscheduled maintenance that had curbed production earlier in the year.
Manufacturing also recovered, posting a 0.6% gain. Durable goods manufacturing led the upswing within manufacturing, rising 1.1%, with machinery and wood product manufacturing singled out as contributors to the increase. The construction sector gained 0.7%, snapping a four-month streak of declines. Residential building improvements and multi-unit residential projects were significant components, each helping to lift construction output through a combined 1.3% increase in those subsegments.
Services-producing sector and transportation
The services-producing sector increased 0.3% in April, marking its third successive monthly rise. The advance reflected steady improvements in public sector activity as well as gains in transportation and warehousing. The public sector aggregate expanded 0.4% with public administration contributing most substantially, rising 0.7% across federal, provincial, and local levels.
Transportation and warehousing rose 0.9%, supported by a 3.8% rebound in rail transport and a 2.6% increase in pipeline activity as operational disruptions from the first quarter eased. Financial activity also improved: finance and insurance rose 0.4% on the back of strong mutual fund and deposit flows. Real estate edged up 0.2%, reflecting a pickup in home resales in the Greater Toronto Area.
Early May estimate and second-quarter tracking
An advance estimate from Statistics Canada indicated that real GDP by industry inched up another 0.1% in May. That preliminary movement was driven by gains in finance and real estate, which were partially offset by declines in wholesale trade and agriculture. On the basis of these early industry readings, tracking for annualized second-quarter growth is roughly 2.5%, which is materially above the Bank of Canada's Monetary Policy Report projection of 1.5% for the quarter.
Market and policy context
CIBC Economist Andrew Grantham said that "today’s data shows the Canadian economy sprang back to life early in the second quarter," calling April the sharpest monthly gain in almost a year. Grantham noted that growth was bolstered by a temporary rebound in oil and gas production but emphasized that the breadth of industry gains underpins CIBC’s expectation that the Bank of Canada will leave its policy rate unchanged for the remainder of the year.
Implications
The April rebound reflects simultaneous improvements across resource extraction, manufacturing, construction, transportation, finance, and public administration. While the pickup in oil sands production accounts for a meaningful portion of the monthly swing, the diffusion of growth across other sectors suggests the recovery in activity was not limited to energy alone. The advance May estimate points to continued, although uneven, momentum into the second quarter.