Economic growth came in flat for April, missing estimates for a 0.2% monthly growth rate.

March GDP growth was also revised up from a flat reading to 0.1% month-over-month growth, according to Statistics Canada. Early estimates for May suggest a 0.4% rebound.

On an annual basis, GDP growth came in at 1.7%.

The data show that goods-producing industries edged up 0.1%, while services-producing industries were unchanged from the previous month.

The recent rebound in home sales also led to 0.5% growth in the real estate and rental and leasing sector, the sixth consecutive month of growth and the largest increase since December 2020, StatCan noted.

Looking specifically at activity at the offices of real estate agents and brokers and activities related to real estate, growth was up 8.6% in April, marking the third straight monthly increase and the largest rise since July 2020.

“Even with the soggy April reading, this report had plenty of redeeming qualities,” noted BMO chief economist Douglas Porter. “The bigger picture is that the Canadian economy is managing to keep its head above water in the face of many challenges. For instance, even with one of the largest strikes in years in April, the economy did not decline.”

Porter pointed out that there hasn’t been one negative monthly reading yet in 2023, which he called an “impressive result” given the widespread forecasts earlier this year for a forthcoming recession.

GDP data unlikely to sway the Bank of Canada from a July rate hike

Economists say today’s weaker-than-expected GDP reading isn’t likely to influence the Bank of Canada at its next rate meeting on July 12.

While another below-consensus real GDP growth reading should be good news for the Bank of Canada, “the Bank likely won’t be happy about the sustained output gains in the economy outside of the public sector so far in Q2, particularly in real estate,” noted Randall Bartlett, senior director of Canadian Economics at Desjardins.

“Combined with the ongoing reluctance of core CPI inflation to trend toward the Bank’s 2% target, we continue to expect the Bank will hike by another 25 basis points at its July meeting,” he added.

TD economist Marc Ercolao agreed, adding that the Bank of Canada is also waiting on several more “key markers” that will be released prior to its meeting, namely next week’s June employment figures.

“In our view, today's GDP print doesn't change the balance of risks towards another quarter-point hike of the policy rate at the next meeting,” he wrote. “We think that ongoing strength in economic activity, a still-tight labour market, and inflation above target tips the likelihood towards a 25-bps hike to 5.00% in July.”

May GDP data will be released on July 28.