Canada's Economy Continues to Struggle in Q1 But Q2 Points to Better Start, Says CIBC

The Canadian economy continued to struggle in Q1 as gross domestic product posted another decline, said CIBC after Friday's GDP data.

The 0.1% annualized drop was in stark contrast with the consensus for a rebound to 1.5%, noted the bank.

Increases in consumption and inventories were offset by a drop in business investment and government spending, as well as a subtraction from net trade as imports increased and exports fell, while residential investment was also down sharply.

This marks the fifth drop in business investment in a row, as trade uncertainty continues to weigh on activity, stated CIBC.

That left final domestic demand at 0.4% quarter-over-quarter annualized decline, down from 2.7% in the prior quarter, while the household saving rate eased off further to 3.5%, the lowest level in two years, which doesn't bode well for consumption in the coming quarter, added the bank.

Q2 got off to a better start, however, with the advance estimate suggesting a 0.4% month-over-month increase in GDP, pointed out CIBC.

Canada's March GDP Falls 0.1%, Misses Expectations; April Seen Rebounding 0.4%

Canadian real gross domestic product edged down 0.1% month over month in March, partially offsetting February's increase of 0.2% and driven by contractions in goods-producing industries, said the country's statistical agency on Friday.March's contraction was worse than a 0.1% month-over-month consensus expansion provided by MUFG.Goods-producing industries contracted 0.8% in March for the fifth decline in the last six months, noted Statistics Canada. The decrease in March was in large part a reflection of lower activity in the mining, quarrying, and oil and natural gas extraction sector, and in the construction sector. Services-producing industries tempered the decline, edging up 0.1% in March. Overall, eight of the 20 industrial sectors contracted in March.Advance information indicates that real GDP increased 0.4% in month over month April, added StatsCan. Increases in mining, quarrying, and oil and gas extraction, manufacturing and transportation, and warehousing were partially offset by decreases in agriculture, forestry, fishing and hunting.Real GDP was unchanged in Q1 quarter over quarter, after declining 0.2% in Q4 2025. Higher imports of goods, particularly gold, were offset by accumulations of business inventories. Decreased business and government capital investment was counterbalanced by higher household spending, as final domestic demand edged 0.1% lower.GDP and Income and Expenditure Accounts measure the production of goods and services in the Canadian economy as well as the incomes arising from this production and expenditure on the production. GDP represents the unduplicated value of goods and services produced during the reference period and are available for domestic consumption, investment or export.

$^GSPTSE$.GSPTSE$$CXY

Canada's Economy Continues to Struggle in Q1 But Q2 Points to Better Start, Says CIBC

Related Articles

Canada's March GDP Falls 0.1%, Misses Expectations; April Seen Rebounding 0.4%

Bartlett On BNN TV Adds "I Think It Is Too Tough To Call"

Bartlett On BNN TV Says He Will Have To Take a Broad Based Look at Today's GDP Data Before Calling It On Whether Or Not Canada Is In a Recession