Q1 2023 GDP Surprise!

Statistics Canada announced the Q1 GDP results yesterday - GDP grew by an annualized 3.1% in the quarter (versus the estimate of 2.4% noted in the article below), driven almost entirely by January growth (revised upward again to 0.7%) - March was flat (0.0% change). Surprisingly, household spending on both goods and services continued strong; this is in spite of increasing interest rates, a drop in household disposable income and an uptick in unemployment. Non-residentiual structures, machinery and equipment posted a 0.5% increase in the quarter, after falling 1.3% in Q4 of 2022. You can read all about it here. Based on the Q1 result, the Bank of Canada may reconsider its pause on interest rate hikes, and some pundits are anticipating a rate increase in June or July.

In March, the construction sector as a whole dropped by 0.1% compared to February, driven by a decrease in new home building. StatsCan estimated April GDP would post an increase of 0.2%. The March announcement is available here.