Economic Growth Surpasses Forecasts, Keeping Bank of Canada Alert

29 Mar, 2024

Economic Growth Surpasses Forecasts, Keeping Bank of Canada Alert

The Canadian economy surprised economists with robust growth in January, outperforming expectations and signaling a potentially active stance for the Bank of Canada. Real gross domestic product (GDP) rose by 0.6%, surpassing the anticipated 0.4% increase. This unexpected growth trend extended into February, with an anticipated 0.4% rise, showcasing a significant two-month upswing equivalent to the entire growth of 2023.

The growth was widespread, with 18 of 20 sectors measured by Statistics Canada showing positive momentum. Public sector activities rebounded, especially in education, after strikes late last year, while manufacturing and utilities saw notable increases. Additionally, real estate, cultural services, and other sectors contributed to the overall expansion.

However, economists remain cautious about sustaining this momentum, citing potential seasonal anomalies and the influence of one-off factors like the resolution of the Quebec teachers' strike. Concerns about future revisions and the possibility of economic headwinds persist, despite the positive growth trajectory.

Job vacancies decreased slightly, reflecting some fluctuations in sectoral employment. Despite the strong start to the year, many economists maintain their forecasts for a potential interest rate cut in June, highlighting ongoing uncertainties despite the encouraging economic performance.