June 1, 2023
The national economy continued to grow overall in the first quarter of 2023 as consumers spent more in the face of recession fears, according to Statistics Canada.
Most economists were surprised by the latest show of the economy’s persistent strength, which some say raises the odds the Bank of Canada will have to increase interest rates again to stamp out inflation.
Canada’s economy grew at an annualized rate of 3.1 per cent in the first quarter, beating Statistics Canada’s early estimates of 2.5 per cent. The Bank of Canada’s latest forecasts had called for 2.3 per cent growth in Q1.
Household spending was up in the quarter following two periods of minimal growth, the agency said Wednesday, but housing investment slowed in the first quarter amid higher borrowing costs.
StatCan said Canadians particularly spent more on new vehicles in Q1. In a note to clients Wednesday, CIBC senior economist Andrew Grantham ascribed that increase to relief in supply chain kinks meaning previous car orders could finally be delivered.
Canadians also returned to dining out and vacations in the quarter, Statistics Canada said, with spending picking up for food, alcoholic and non-alcoholic beverages and travel expenditures.
