{"id":75237,"date":"2026-06-30T17:15:09","date_gmt":"2026-06-30T17:15:09","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/06\/30\/false-alarm-on-recession-economists-react-to-aprils-gdp-numbers\/"},"modified":"2026-06-30T17:15:09","modified_gmt":"2026-06-30T17:15:09","slug":"false-alarm-on-recession-economists-react-to-aprils-gdp-numbers","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/06\/30\/false-alarm-on-recession-economists-react-to-aprils-gdp-numbers\/","title":{"rendered":"&#039;False alarm&#039; on recession: economists react to April&#039;s GDP numbers"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<br \/><iframe loading=\"lazy\" title=\"Bank of Canada not &amp;apos;in rush&amp;apos; to rescue housing markets\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/DSHlCmbmUZo?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p> Canada\u2019s economy topped even the most upbeat expectations for April as real gross domestic product (GDP) grew 0.5 per cent . <\/p>\n<p> The rebound from a 0.1 per cent contraction in March was driven by strength in mining, quarrying, and oil and gas extraction, Statistics Canada said Tuesday. <\/p>\n<p> Economists say the bounce back should be enough to quiet recession talk, but not quite enough to move the Bank of Canada on interest rates . Here\u2019s what some of them had to say about the latest GDP numbers. <\/p>\n<h2>\u2018Broad-based\u2019 growth: TD<\/h2>\n<p> \u201cThe bigger message here is that this reading should take some air out of the recent \u2018technical recession\u2019 narrative,\u201d Toronto-Dominion Bank economist Marc Ercolao said in a note. \u201cThe economy is grinding through a soft patch, but household demand is still providing support to activity, while trade exposed industries are pointing to a tentative recovery.\u201d <\/p>\n<p> This argues for \u201cpatience rather than a pivot\u201d for the Bank of Canada, Ercolao said. TD expects the central bank to hold its benchmark interest rate at 2.25 per cent as \u201cfirmer near-term growth lowers the urgency to ease\u201d and inflation remains \u201ccontained for now.\u201d <\/p>\n<p> April\u2019s growth was \u201cbroad-based,\u201d Ercolao noted, with 14 out of 20 industries registering increases. Growth in goods-producing industries reversed last month\u2019s decline, while the services sector grew for the third month in a row. <\/p>\n<p> Ercolao said this points to \u201ca better handoff into the second quarter, with Q2 growth now tracking above two per cent annualized.\u201d <\/p>\n<h2>\u2018False alarm\u2019 on recession: BMO<\/h2>\n<p> \u201cThe Canadian economy seemingly shook off the winter blues all at once\u201d in April as manufacturing, construction, rail transportation and pipeline activity all rebounded in sync, Bank of Montreal chief economist Doug Porter said in a note. <\/p>\n<p> Porter said the second quarter started on \u201csolid footing,\u201d and there is \u201csubstantial upside\u201d to BMO\u2019s estimate of one per cent GDP growth in the quarter, which ends June 30. <\/p>\n<p> \u201cIf these numbers hold, Q2 is on track for growth of over two per cent,\u201d Porter said. <\/p>\n<p> StatCan\u2019s advance estimate for May says real GDP increased by 0.1 per cent. <\/p>\n<p> \u201cA more moderate gain in May GDP will serve as a reminder that Canada is still growing slower than potential, so no one should mistake the April bounce as a sign of a robust economy,\u201d Porter said. \u201cNevertheless, it\u2019s also clear that the small two-quarter dip in output was a false alarm on the recession watch.\u201d <\/p>\n<h2>Rate hikes \u2018a long way off\u2019: Capital Economics<\/h2>\n<p> April\u2019s stronger-than-expected gains put second-quarter growth on track to \u201crebound strongly,\u201d Thomas Ryan, North America economist at Capital Economics Ltd., said in a note. <\/p>\n<p> \u201cWhile this should put a firm end to any debate about whether the economy is in recession, growth over the first half of the year is still set to average considerably below the Bank of Canada\u2019s forecast, supporting our view that rate hikes are a long way off,\u201d Ryan said. <\/p>\n<p> Ryan said \u201cstandouts\u201d in goods-producing industries included construction and manufacturing, while accommodation and food services and public administration notched strong growth within the services sector. <\/p>\n<p> After April\u2019s strong gain, Ryan said StatCan\u2019s preliminary estimate for 0.1 per cent growth in May is \u201cslightly disappointing.\u201d <\/p>\n<p> \u201cEven so, allowing for a stronger June given the drop back in oil prices and World Cup-related activity, second-quarter GDP growth looks on track to rebound by around 2.4 per cent annualized,\u201d Ryan said. <\/p>\n<h2>Economy \u2018back to life\u2019: CIBC<\/h2>\n<p> Andrew Grantham, senior economist at Canadian Imperial Bank of Commerce, said in a note that early tracking for the second quarter points to annualized growth of roughly 2.5 per cent. <\/p>\n<p> \u201cWhile that would be stronger than the Bank of Canada\u2019s last MPR projection (1.5 per cent), it wouldn\u2019t quite make up for the undershoot in Q1 from an output gap point of view,\u201d Grantham said. \u201cAs a result, we continue to forecast no change in the Bank\u2019s overnight rate this year.\u201d <\/p>\n<p> While CIBC was already expecting a \u201chealthy rebound\u201d in the second quarter, Grantham said the period was also \u201cflattered somewhat by a rebound in mining, oil and gas, as well as potentially a boost from FIFA World Cup spending and preparations.\u201d <\/p>\n<p> \u201cBecause of that we could see growth slow to a slightly more modest pace in Q3, and we continue to see the need for interest rates to remain at current levels to support a sustainable recovery,\u201d Grantham said. <\/p>\n<ul class=\"related_links\">\n<li>Canada&#8217;s economy rebounds, growing more than expected in April<\/li>\n<li>Full adoption of AI and digital technology by SMEs could generate $350 billion in economic growth<\/li>\n<\/ul>\n<p> <em>\u2022 Email: jswitzer@postmedia.com<\/em> <\/p>\n\n<br \/>&#039;False alarm&#039; on recession: economists react to April&#039;s GDP numbers<\/a><br \/>\n<br \/>2026-06-30 17:15:09<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Canada\u2019s economy topped even the most upbeat expectations for April as real gross domestic product (GDP) grew 0.5 per cent . The rebound from a 0.1 per cent contraction in&#8230;<\/p>\n","protected":false},"author":2,"featured_media":75238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2026\/06\/no0630boc.jpg","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-75237","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/75237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=75237"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/75237\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/75238"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=75237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=75237"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=75237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}