Brief: Statistics Canada Says April Preliminary GDP Up 0.4% M/M

Brief: Canada's March GDP Contracts 0.1% M/M; MUFG Says Consensus Saw 0.1% Growth

Payrolls Data Signals Further Sign of A Very Weak Labor Market in Canada, Says Rosenberg Research

Canada was on the receiving end of some "very disappointing" industry employment (SEPH) data on Thursday, with it showing a 31,800 job pullback in March on top of a 38,100 contraction the prior month, said Rosenberg Research.The year-over-year trend is flat, noted Rosenberg Research. "There was "no pulse at all" in the workweek, and virtually none in nominal wages for hourly employees."If it wasn't for a 4,300 spike in public sector payrolls and a 1,900 expansion in non-cyclical health & education, the headline decline would have been closer to minus 40,000 -- a number Rosenberg hasn't seen since late 2023.The fact that the most interest-sensitive sectors are "taking it on the chin the most" (construction -4,100 after a like-sized decline in February; -1,90 in the real estate sector for the worst showing since last September; and a "whopping" -3,600 slump in retail, the third straight "drubbing") should serve as a warning to the Bank of Canada to go light on its hawkish rhetoric, said Rosenberg.In a further sign of "uber-weak" labor demand, the job vacancy rate remained stuck at 2.8% for the fourth month in a row, not just scaling the low end of the cyclical range but back to where it was in the fall of 2017 when the BoC was pinning the policy rate at 1.0%, noted Rosenberg.

BMO on The Day Ahead in Canada

The Canadian gross domestic product report for Q1 is the key release of Friday, at 8:30 a.m. ET, said Bank of Montreal (BMO).The bank notes that the Canadian economy seemed to regain its footing at the start of the year. BMO expects real GDP to expand 1.5% a.r. in Q1 following a modest contraction in Q4. The bank's call is a touch softer than the flash estimate (+1.7% a.r.).Swings in trade -- like that in March -- can drive larger-than-normal differences between measures of GDP by industry (the flash estimate) and by expenditure (next week's release), stated BMO. Still, spending by governments and consumers drove Q1's recovery, with the latter hanging in there despite a softer labor market and ongoing economic uncertainty.Business investment likely pulled back from a rare increase in Q4, while housing activity continues to struggle in some of the largest regions in the country. Net exports look to drag on growth despite the energy shock, offset by an increase in inventories, although the bank predicts the former may support growth in Q2.In the monthly data, real GDP is expected to grow 0.1% in March, a tenth firmer than the flash estimate, added BMO. Manufacturing and wholesale trade volumes continued to recover from an early-year slump, while hours worked ticked up. On the flip side, weaker retail sales volumes dragged on growth, and Statistics Canada noted that activity declined in mining, quarrying, and oil and natural gas.Elsewhere, home sales continued to struggle as the spring buying season kicked off.Overall, momentum looks to have slowed as geopolitical uncertainty ratcheted even higher in March, pointing to a softer hand-off heading into Q2, according to the bank. While the energy price spike will benefit resource extraction and trade, the broader economy will continue to face the twin headwinds of the energy price shock and tariff uncertainty.BMO will watch the flash estimate for April for a look at how Q2 started.