Canada's economy shakes off doldrums, expands 0.3% in April

Canada's gross domestic productexpanded by 0.3 per cent in April, following a 0.5 per cent increase in March, Statistics Canada reported Friday.

The economy was boosted by a 5.5 per cent rise in oil and gas extraction, as output increased following production cuts in Alberta that started in January 2019. Higher oil prices helped encourage the expansion.

Wholesale trade and the construction sector grew, but manufacturing contracted by 0.8 per cent, in part because of temporary shutdowns at some motor vehicle operations.

The stronger growthmarks a turnaround sincethe beginning of 2019 and end of 2018, and was higher than economists had expected.

Canada's economy expanded at an annualized pace of just 0.4 per cent in the first three months of the year, giving the country its weakest back-to-back quarters of growth since 2015.

The real gross domestic product reading for the first quarter followed a revised growth number of just 0.3 per cent in the previous quarter, the slowest two-quarter stretch of growth since an oil-price plunge caused the economy to shrink over the first half of 2015.

TD senior economist Brian DePrattosaid the Canadian economy seems to be shaking off its late-2018 blues, and predicted second-quarter growth could hit 2.5 per cent.

But he said the optimism did not extend across all sectors, with retail "stuck in neutral" and manufacturing decline that may go beyond auto shutdowns.

"Thank goodness for energy. Without the surge of activity in that sector, driven by the easing of production restrictions, this would have been a much more modest report," he wrote in a note to clients.

The increased pace led to more job creationin April and May, according to the last employment figuresfrom Statistics Canada.

The economy added 30,000 jobs in May, on top of 106,500 in April, decreasing joblessness to a 30-year low of 5.4 per cent. In some parts of the country, employers are complaining of a labour shortage.

The June jobs report arrives next Friday, and could reflect fallout from U.S. President Trump's tariff threats to Mexico and the U.S. trade war with China.

BMO chief economist Doug Porter said that with "the global backdrop dampened by trade war fears, [the second quarter]might be meaningfully more challenging."