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Economic News

Canada: What Recession? April Real GDP Rebounds, Reinforcing a Return to Growth in Q2

June 30, 2026
LJ Valencia
Economist

Highlights

  • Canadian real GDP rose by 0.5% m/m in April, following a decline of 0.1% in March. This was above the consensus of economic forecasters and Statistics Canada’s flash estimate (0.4%). This increase was mostly driven by goods-producing industries while services-producing industries rose more modestly. See Table 1 for further details.
  • Statistics Canada’s flash estimate points to a 0.1% increase May (graph 1), probably due to gains in finance and insurance and real estate and rental and leasing somewhat offsetting weakness in wholesale trade and agriculture, forestry, fishing and hunting.

Comments

The strong real GDP print in April was the largest expansion since July 2025—a broadly positive development. The upward shift was largely attributed to increased activity in goods-producing industries (1.2% m/m). The mining, quarrying, and oil and gas extraction sector led the growth (2.9%), the strongest pace since February 2024. These gains came on the back of oil and gas extraction (3.7%). The surge reflected a rebound in oil sands production following an extended period of maintenance in the first quarter of 2026. In addition, manufacturing expanded in the month (0.6%), due to higher activity in durable-goods manufacturing.

Meanwhile, the services sector grew at a more moderate pace (0.3%), marking its third uninterrupted month of growth. Public administration rose for the second consecutive month (0.7%), on the back of greater activity across all levels of government. Transportation and warehousing posted gains (0.9%), mainly thanks to increases in rail and pipeline transportation. Finance and insurance edged higher in April (0.4%), the third increase in four months, partly driven by strength in deposits and mutual fund activity.

The April print resulted in an increase in Canada’s real GDP per capita. That said, the underlying trend remains disappointing, indicating that changes to immigration policy alone are unlikely to restore sustained per capita growth (graph 2).

Implications

Our tracking suggests real GDP growth of around 1.5% annualized in Q2 2026. This is broadly in line with the Bank of Canada’s outlook published in the April 2026 Monetary Policy Report External link..

The report should put to bed any remaining speculation that Canada might be in recession. Only four sectors showed declines in April, which is the opposite of a recession pattern. And some of the idiosyncratic headwinds of Q1, notably around the energy sector, are now behind, while the sector benefits from the spike in demand from alternative suppliers in the wake of the Iran conflict.

Despite the positive news, the path ahead is volatile. Geopolitical tensions in the Middle East External link. remain elevated. In addition, the outcome of the Canada-United States-Mexico joint review remains unknown. With these risks in mind, the Bank left rates unchanged in its latest announcement External link., signalling that it is ready to respond as needed. Overall, today’s GDP data is unlikely to influence the Bank’s policy direction in the near-term.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.