April GDP rose a stronger-than-expected 0.3% in the month following an unrevised 0.1% gain in March and a 0.2% drop in February, according to figures released this morning by Statistics Canada. Expectations going into the report were for a more moderate strengthening to 0.2% in April.
Expectations of a modest strengthening in April were in part a reflection of indications that wholesale trade rose strongly in the month which was confirmed this morning with the sector showing a robust 1.2% gain in the month. Strength was also expected from a bounceback in mining after temporary shutdowns of various production facilities weighed on activity in the sector in March and February.
Such was confirmed in today’s report with mining output rising a stronger-than-expected 2.7%. Output in agriculture also shot up in April rising a solid 1.5%. Utilities output was also expected to start reversing some weakness in March (-0.9%) and February (-2.1%) related to the warm winter weather lowering heating demand. However, this component continued to decline though by a more moderate 0.2% in April. We expect a reversal of this weakness to start showing up in the May data. Manufacturing declined as expected in April by 0.3% while construction was down 0.1%. However, these declines only tempered the strong gains in mining and agriculture resulting in the goods-producing component rising a strong 0.8% in the month.
Despite the gain in wholesale trade, overall service-producing industries only rose 0.1% in the month. The overall increase was tempered by declines in retail trade (0.8%), arts and entertainment (1.0%) and accommodation and food services (0.6%).
The 0.3% gain in April extends a solid improving trend in recent months helping to recover from the disappointing decline in February GDP. Looking ahead to May, experts are assuming a return to growth in the utilities sector along with further rebound from maintenance shutdowns in crude petroleum production will allow the April growth rate to be maintained.
