Canada’s economy grew for a sixth straight month in April, albeit at a slower pace, further underscoring policymakers’ view that conditions are in place for an interest-rate rise as soon as this summer.
Gross domestic product for April grew 0.2 per cent from the previous month, according to Statistics Canada. While this is down from the 0.5 per cent pace recorded in March, the figure — which offers the market a first look at how the economy has fared during the first month of the second quarter — points to the country’s steady recovery from the global oil crash three years ago.
April’s gain was driven by a broad sweep of sectors, including resources, construction, wholesale goods and retail.
“A rebound in energy production is fueling growth of related industries (wholesale and transport) and propelling Canada’s economy forward in 2017,” said Bill Adams, senior international economist at PNC Financial Services.
“We continue to see the most likely timing for a Bank of Canada interest rate hike as January of 2018, not far off. A hike at October 25 release of the fall Monetary Policy Report would become likely if Canada adds full-time jobs between now and then and if wage growth and inflation pick up.”
Expectations have been mounting that the Bank of Canada would raise interest rates this year following hawkish comments from two top policymakers earlier this month. Speculation has been further fueled by strong first-quarter GDP and a spate of solid consumer spending, retail sales and jobs data — which have all bolstered confidence over the economy.
The prospect of a rate hike has sent the Canadian dollar rallying nearly 4 per cent against the greenback so far in June. The loonie was trading at a nine-month low of C$1.2947 per dollar on Friday.