OTTAWA — The Canadian economy grew 0.3 per cent in April, matching analyst expectations, driven largely by the oil and gas sector, but most likely contracted in May, Statistics Canada data showed on Thursday.

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Canada's economy grew 0.3% in April, but likely shrank in May Back to video

While the April month-on-month increase was in line with forecasts of analysts polled by Reuters, a flash estimate showed Canada’s gross domestic product likely declined 0.2 per cent in May on lower oil and gas output amid regular maintenance shutdowns.

In April, oil and gas extraction rose 3.9 per cent, the largest monthly increase since September 2020, buoyed by higher activity across the board, Statscan said. The mining sector also grew, led by potash.

Accommodations and food services continued to rebound from pandemic-related restrictions, expanding 4.6 per cent, with activity at restaurants and bars surpassing pre-pandemic levels for the first time.

But the real estate and rental sector was a drag, down 0.8 per cent, the largest monthly decline on record outside March and April 2020, when the coronavirus pandemic took hold.

The finance sector also contracted, falling 0.7 per cent, following elevated levels of activity in March, Statscan said.

The Canadian dollar pared its decline after the data, trading down 0.1 per cent at $1.29 against the U.S. dollar, or 77.52 U.S. cents.

Surging crude and commodity prices are expected to buoy Canada’s economy this year, even as a looming economic storm threatens to tip its fellow G7 rich nations into recession.

© Thomson Reuters 2022