Canadian economic activity increased by 0.5% in April, slightly above expectations, while trade negotiations continue to pose challenges.
RBC Economics reported a firmer start to the second quarter of 2023 with Canada's economic activity growing by 0.5% in April, surpassing both Statistics Canada’s advance estimate and market consensus at 0.4%. The May reading was +0.1%, aligning with RBC's observations.
The strong performance is underpinned by robust manufacturing sales that rose by 1.1%, driven primarily by increased motor vehicle production. Additionally, home resales surged by a notable 5.1% in the month, marking the strongest single-month gain since October 2024. Employment also showed resilience with total hours worked increasing by 0.6%. These figures highlight ongoing economic strength despite trade uncertainties.
Trade negotiations between Canada and its USMCA partners remain tense as they focus on refining the agreement. This uncertainty is expected to continue weighing down economic activity, particularly in sectors heavily reliant on international trade.
The Canadian dollar (CAD) began the year with volatility but has stabilized at 1.4200 against the U.S. dollar today. However, Wednesday marks a holiday in Canada, leading to lighter market trading volumes and limited CAD liquidity.
Traders should monitor ongoing negotiations between Canada and its USMCA partners for any significant developments that could impact economic forecasts and market sentiment.
Source: InvestingLive. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.