MNI DATA BRIEF: Canada Q1 GDP Grew Less Than Expected 3.1%

Canada's GDP grew at a 3.1% annualized pace in the first quarter, less than markets expected, as stronger consumer spending and business investment was dragged down by a weaker volume of exports.

Economists predicted a 5.2% pace, though the result is in line with the Bank of Canada's forecast of 3% growty

Statistics Canada on Tuesday also reported a flash estimate of April GDP growth of 0.2%. That followed a 0.7% gain in GDP for March.

First-quarter export volumes fell 2.4% led by energy products, while energy prices surged. In another sign of inflation, employee compensation rose 3.8%, the most since 1981 save for the third quarter of 2020 after Covid lockdowns. 

Business investment rose at a 12% annualized pace and household spending by 3.4%. 

Bank of Canada Governor Tiff Macklem has said the economy was moving beyond full output and he’s prepared to be forceful if needed to bring inflation back to the 2% target. With the CPI nearing the fastest since 1982 at 6.8% in April economists predict the Bank will hike rates another 50bps to 1.5% Wednesday.