{"id":770696,"date":"2026-06-30T21:29:10","date_gmt":"2026-06-30T21:29:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/770696\/"},"modified":"2026-06-30T21:29:10","modified_gmt":"2026-06-30T21:29:10","slug":"canadian-economy-snaps-back-from-winter-lull","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/770696\/","title":{"rendered":"Canadian economy snaps back from winter lull"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Canada’s economy has faced headwinds after U.S. tariffs sent shocks through certain export sectors and dampened companies’ expansion plans.DARRYL DYCK\/The Canadian Press<\/p>\n

The Canadian economy bounced back to expansion in the spring months, recovering from a winter stagnation and quieting the debate about a potential recession.<\/p>\n

Real gross domestic product jumped by 0.5 per cent between March and April, with a preliminary estimate for May showing an additional 0.1-per-cent gain, Statistics Canada reported on Tuesday. The economy is tracking toward annualized growth of more than 2 per cent in the second quarter.<\/p>\n

The Canadian economy has largely flatlined over the past year as it faces major headwinds from U.S. tariffs, which sent a shock through certain export sectors, and dampened companies\u2019 investment and hiring plans. Real GDP contracted in both the fourth quarter of 2025 and the first quarter of 2026 on an annualized basis.<\/p>\n<\/p>\n

While two consecutive quarters of decline is sometimes referred to as a \u201ctechnical recession,\u201d economists on Bay Street have mostly rejected the label and said the numbers so far don\u2019t amount to a full-blown recession. The Bank of Canada<\/a>\u2019s rate-setting council has described the economy as \u201cweak,\u201d but also stated that it \u201cwas not clearly in recession,\u201d according to the deliberations for its June rate decision.<\/p>\n

\u201cToday\u2019s print and the tracking for the second quarter pour a bit of cold water on that technical recession narrative,\u201d Marc Ercolao, economist at Toronto-Dominion bank, said in an interview.<\/p>\n

Recessions are typically characterized by the depth and duration of the decline, and the breadth across industries. Mr. Ercolao said April\u2019s rebound and the preliminary gain for May \u201cpoints more to an economy that maybe stumbled for a bit at the start of the year, and now it\u2019s regaining its footing, rather than an economy that is still actively sliding.\u201d<\/p>\n

While April\u2019s rebound was led by growth in the oil and gas sector \u2013 which contributed to about half the overall monthly GDP gain \u2013 activity there was expected to rebound, as the industry faced maintenance, adverse weather and shutdowns in March.<\/p>\n

However, the bounce back was larger than expected and production was possibly motivated by higher oil prices that stemmed from conflict in the Middle East.<\/p>\n

Fourteen of 20 industries saw growth in April, including gains in the construction and manufacturing sector, despite uncertainty around United States-Mexico-Canada Agreement negotiations dragging on the industries\u2019 outlook.<\/p>\n

The USMCA trade pact is up for review on July 1, at which point the member countries can decide to renew the deal for 16 years, although that outcome is unlikely<\/a>.<\/p>\n

Carney signals no USMCA extension expected on Wednesday<\/a><\/p>\n

St\u00e9fane Marion, chief economist at National Bank, said that he\u2019ll be more confident that Canada is on a steady growth path when business investment recovers, which will be difficult in the face of trade negotiations.<\/p>\n

\u201cYou need to find a deal to get your business investment back in growth-mode, because that\u2019s the missing part for the Canadian economy,\u201d Mr. Marion said.<\/p>\n

While Tuesday\u2019s report pointed to a firmer start to the second quarter, some economists remain cautious of the outlook.<\/p>\n

This is partly because monthly GDP is measured by industry output, while quarterly GDP is evaluated by expenditure, which measures the final demand for goods and services. <\/p>\n

While directionally correlated, economists and policymakers prefer to measure economic performance using GDP by expenditure, because it incorporates household consumption, business investment, government spending and net exports. Earlier this year, monthly GDP estimates suggested that growth was stronger than the first-quarter GDP report wound up revealing.<\/p>\n

\u201cI think that this release kind of carries a bit of an asterisk in that sense,\u201d Tiago Figueiredo, macro strategist at Desjardins, said in an interview.<\/p>\n

However, other indicators are also pointing to growth in the second quarter. <\/p>\n

Employment jumped by 88,000 positions in May, hinting at signs of a rebounding labour market, and consumer spending has remained steady despite higher energy prices that are now falling. Home resales across the country also increased in May, and Statistics Canada reported a positive early estimate for manufacturing sales for the month.<\/p>\n

Mr. Marion said that April\u2019s GDP report won\u2019t move the dial for the Bank of Canada, which has held its key interest rate at 2.25 per cent for five consecutive meetings. The central bank\u2019s next rate decision is on July 15.<\/p>\n

Interest rate swaps, which capture market expectations of monetary policy, suggest there\u2019s a two-thirds chance the Bank of Canada will hike its key rate by a quarter percentage point by the December meeting. Many economists on Bay Street think the central bank will remain on hold through the end of the year.<\/p>\n

\u201cGood news is we\u2019re not in a recession, but we\u2019re still at stalling speed,\u201d Mr. Marion said.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Canada’s economy has faced headwinds after U.S. tariffs sent shocks through certain export…\n","protected":false},"author":2,"featured_media":770697,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[3793,3782,64,63,3794,1348,3774,3795,99,2065,3773,3787,3788,3784,3775,3772,164,2555,75,69,3781,3805,3776,3777,3786,3783,1625,2289,3796,3779,3800,3801,3803,3798,3802,3797,3799,3778,3790,3791,84,3789,2111,635,105,3792,3785,3780,1346,3804],"class_list":["post-770696","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-au","tag-australia","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/770696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=770696"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/770696\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/770697"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=770696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=770696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=770696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}