Oil Rebound Drives Canada's Best 2-Month GDP Gain Since 2017

(Bloomberg) -- Canada recorded a second strong month of growth in April, driven by rebounding oil output that is returning the nation’s economy to a more solid footing.

Gross domestic product rose 0.3%, after a 0.5% gain in March, Statistics Canada said Friday from Ottawa. That marks the strongest two-month increase since the end of 2017. The figure topped the 0.2% gain expected in a Bloomberg survey of economists.

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.

--With assistance from Erik Hertzberg.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary

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