MNI DATA BRIEF: Canada Q1 GDP +5.6% Annualized, -0.8% in April

Canada's GDP grew at a less-than-expected 5.6% annualized pace in Q1 and a flash estimate showed monthly output was down 0.8% in April to start the second quarter, suggesting a bigger than expected drag from the third wave of the pandemic.

The first quarter figure was less than Statistics Canada's earlier flash estimate and the market consensus for growth at a pace around 6.5%. The April GDP contraction is also the biggest since the first-wave lockdown. While the figures are somewhat disappointing, vaccination progress and high prices for exported commodities has industry sources telling MNI growth will likely resume in the next few months.

The first quarter gain puts total output above where it was a year ago, and the GDP price index rose at a record rate in the first quarter as more firms re-opened and energy and building material costs surged. The household savings rate also remained historically high in the double-digit range on government support, suggesting a lot of upside for consumer spending when lockdowns ease again.