Canada Economics: Stronger rebound in April GDP

Research evidence excerpt

Canada Economics: Stronger rebound in April GDP

Canada Economics

30 June 2026 Citi Research

Data – GDP by industry rose 0.55%MoM in April, stronger than expectations and

Statistics Canada’s preliminary estimate of 0.4%. Strength was led by goods

producing sectors, where output rose 1.25%MoM. Services sector output rose

0.26%MoM. GDP was up 1.1%YoY in April. Statistics Canada estimates a more

modest 0.1% increase in GDP in May.

Citi’s view – The April rebound in activity was a bit stronger than we were expecting

and will help reaffirm BoC expectations that activity will pick up after weakness in

Q4/Q1. But with a more modest 0.1% increase in GDP estimated in May, it is not

clear that strong activity will be sustained. We still expect updated growth

forecasts for 2026 in the July MPR will be overall softer than expected in April. We

continue to think an economy in persistent excess supply requires more

accommodative rates to help close the output gap, especially as various measures

of core inflation remain at or below 2%. Employment data released next Friday will

likely be more important in determining shifting communications from BoC officials

in July.

Strength in activity in April was largely broad-based, and BoC officials may be

particularly encouraged by the strongest increase in services activity since July last

year. Strength in sectors like food services and accommodations could persist

through the summer, as large events (like the World Cup) have had a noticeable

impact on activity in Canada in the past. Statistics Canada would likely note any

unique impacts in its GDP report.

But in April, goods-producing sectors were the clear driver of strong activity, with

rebounds in mining, manufacturing and construction. Mining activity could remain