What recession? Canada's economy just posted its best month since last summer

Canada's economy grew 0.5 percent in April, rebounding from a 0.1 percent contraction in March and beating the 0.4 percent expansion economists polled by Reuters had forecast. 

Statistics Canada reported the gain on Tuesday, with Reuters describing it as the largest monthly expansion in nine months. 

The result has largely settled the recession debate that built through the spring, though economists say it does little to move the Bank of Canada off the sidelines.  

The central bank is widely expected to hold its benchmark rate at 2.25 percent for a sixth straight time on July 15, according to BNN Bloomberg. 

"This is not an economy in recession," said Andrew DiCapua, principal economist at the Canadian Chamber of Commerce, in an emailed statement to Wealth Professional.  

He added that the rebound shows the economy "is still chugging along, even if growth remains sluggish and not especially strong." 

For the wealth industry, the read on rates is the sharper takeaway, and the debate is running toward hikes rather than cuts.  

First-half growth, wrote Thomas Ryan, North America economist at Capital Economics, is still on course to fall well short of the central bank's forecast.  

That ends the recession debate, he said, but leaves growth "considerably below" the Bank of Canada's forecast and rate hikes "a long way off."  

Any move, Sébastien McMahon, chief economist at iA Financial Group, told BNN Bloomberg, would more likely be a hike, but "likely it's a 2027 story," with core inflation at 1.6 percent against the bank's 2 percent target. 

Energy did much of the lifting.  

Dominique Lapointe, director of macro strategy at Manulife Investment Management, told BNN Bloomberg the sector contributed "perhaps more than half" of April's growth, spanning oil and gas extraction, pipeline transportation and refined petroleum manufacturing.  

Statistics Canada said the mining, quarrying, and oil and gas extraction sector rose 2.9 percent, its largest monthly gain since February 2024, as oil sands extraction climbed 6.6 percent on a rebound in synthetic crude oil production following earlier unscheduled maintenance.  

Lapointe tied the strength to global demand and a Trans Mountain pipeline running at full capacity, noting that Western Canadian Select traded around US$56 per barrel, more than 30 percent above where it started the year. 

The gains reached well beyond energy.  

Statistics Canada said 14 of 20 industrial sectors grew, with goods-producing industries up 1.2 percent and services-producing industries up 0.3 percent for a third consecutive month.  

Construction rose 0.7 percent, its first increase in five months, while manufacturing added 0.6 percent and transportation and warehousing gained 0.9 percent.  

BMO chief economist Doug Porter called the earlier recession talk a "false alarm," writing that the economy "seemingly shook off the winter blues all at once." 

Sectors closest to the wealth industry also firmed.  

Finance and insurance rebounded 0.4 percent, which the agency attributed to higher deposits at chartered banks and stronger mutual fund activity.  

Real estate and rental and leasing rose 0.2 percent, and offices of real estate agents and brokers climbed 1.3 percent, their first increase since August 2025, on stronger home resale activity in the Greater Toronto Area. 

Statistic Canada's advance estimate points to 0.1 percent growth in May, a preliminary figure it will revise on July 31.  

Even so, CIBC senior economist Andrew Grantham pegged early second-quarter tracking at roughly 2.5 percent annualized, above the Bank of Canada's 1.5 percent projection, though he said in a note it would not fully offset the first-quarter undershoot and that CIBC still expects no change in the overnight rate this year.