Data released on Wednesday showed the Canadian economy contracted in April but less than expected. Analysts at the National Bank of Canada point out it was the first decline in GDP after eleven months. They believe the second quarter will be slightly positive.
Key Quotes:
“Canadian GDP registered its first decline in April after 11 months of growth given more severe sanitary measures and against the backdrop of a slow start to the vaccination campaign (which has since become one of the most successful in the world). Notwithstanding the drop, total output remains a mere 1.2% from its pre-pandemic level. It should not come as a surprise that the industries most affected by social distancing measures registered some of the steepest declines.”
“Strong demand for commodities on a global basis were reflected in the monthly surge for mining/quarrying/oil&gas. Statistics Canada's preliminary estimate for a negative May print will surely materialize as April sanitary measures spilled over into May.”
“Looking at the quarterly perspective, while the second quarter appears to be on track for a decline, nationwide reopenings as well as the easing of the strictest sanitary measures (close to 70% of the population has been at least partially vaccinated) should allow the month of June to offset prior declines. As such, we still believe the second quarter will be slightly positive for growth.”