Canada’s economy grew 0.3% in April, with another gain in May

Canada’s gross domestic product rose 0.3% in April, matching market expectations. Growth came from sectors such as wholesale trade and manufacturing, and the economy is likely to continue expanding in May, data showed Friday.

Analysts polled by Reuters had forecast GDP growth of 0.3 percent this month, after economic growth collapsed in March.

April’s growth, the fastest since January’s 0.5 per cent, was driven by recovery in the wholesale trade, mining, quarrying and oil and gas production and production sectors, Statistics Canada said.

According to preliminary estimates for May, Statscan said GDP likely rose by 0.1 percent as gains in manufacturing, real estate and rental and leasing, and finance and insurance were partially offset by declines in retail and wholesale trade.

These data may be revised after the next GDP data is announced on July 31.

Money markets, which at the beginning of the week had almost a 75% chance of an interest rate cut, reduced the chance to about 40% after Tuesday’s release of inflation data. After the release of GDP data, the rates increased slightly, to 42%.

Canadian inflation data showed consumer prices unexpectedly rose in May.

The next central bank interest rate announcement will be July 24. Before that, we will get another inflation reading and the June employment report.

The Canadian dollar extended losses slightly after the data, with the loonie against the U.S. dollar falling 0.06 percent to 1.3709, or 72.94 U.S. cents.

Friday’s data shows the Canadian economy is on track to exceed the Bank of Canada’s second-quarter annual growth forecast of 1.5%.

GDP grew 1.7 percent in the first quarter, lower than the bank’s forecast growth rate of 2.8 percent.

The statistical office reported that growth was recorded in 15 out of 20 sectors in April.

Retail trade, helped by food and beverage retailers and petrol stations, was the other main driver of growth in April, after two consecutive monthly declines, it said.

Construction & real estate and rental & leasing were the sectors that led the growth this month.

Overall, both the goods-producing and services industries grew 0.3% in April.

In June, the central bank cut its key interest rate for the first time in more than four years and said further cuts were likely if inflation continued to decline steadily toward its 2 percent target.