The Canadian economy managed to keep growing in the first quarter, but at a slower pace than first expected, Statistics Canada said Friday.
StatCan said real gross domestic product (GDP) grew at an annualized pace of 1.7 per cent in the first quarter of 2024.
The agency’s preliminary estimates had assumed the Canadian economy grew at an annualized rate of 2.5 per cent to start the year. That’s also below what most economists were expecting and the Bank of Canada’s latest estimates of 2.8 per cent for the quarter.
An uptick in household spending helped fuel economic growth in the first quarter, though businesses saw their inventory accumulation slow. Consumers were spending more on services in the quarter, StatCan said, particularly on rents, telecom and air transportation.
Canadians were also saving more, however, with the household savings rate reaching 7.0 per cent, the highest level in two years amid gains in disposable income.
On a monthly basis, StatCan said growth was essentially unchanged in March. Early estimates for April show signs of a return to growth at 0.3 per cent amid strength in the manufacturing, mining and oil and gas sectors. The agency will update those preliminary figures in June.
StatCan also revised its earlier estimates for the fourth quarter of 2023. Following an annualized dip of 0.3 per cent in the third quarter last year, StatCan now says Canada eked out growth of just 0.1 per cent to end the year – narrowly avoiding the definition of a technical recession of two consecutive quarters of declines.
The GDP report is the last major economic data point before the Bank of Canada’s interest rate decision set for next week.
Central bank governor Tiff Macklem has said a rate cut is within the realm of possibilities, but that the decision will be based on the economic data.
– with files from The Canadian Press
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