Canada’s real gross domestic product grew by 0.5 per cent in April, marking a strong start to the second quarter of 2026 that was slightly higher than economists’ expectations.

Gains were mainly driven by the mining, quarrying, and oil and gas extraction sectors , which grew by 2.9 per cent month-over-month in April, Statistics Canada said Tuesday .

This is the largest growth rate for the sector since February 2024 and “more than offsets” March’s 1.4 per cent contraction, officials said.

The manufacturing sector also rebounded in April, expanding by 0.6 per cent month-over-month following a 0.1 per cent contraction in March, driven by growth in durable-goods manufacturing industries.

The construction industry fuelled economic growth as well — expanding by 0.7 per cent month-over-month in April for the first time in five months. Transportation and warehousing, real estate and rental and leasing, finance and insurance and public administration also posted gains.

Economists largely expected the economy to grow in April, after it contracted unexpectedly by 0.1 per cent annually in the first quarter of 2026, putting Canada into a technical recession.

StatCan’s flash estimate suggests the economy grew by 0.1 per cent in May on gains in the real estate sector amid contractions in wholesale trade and agriculture, forestry, fishing and hunting.

“Canada is not in a recession. We’re looking at this report and we’re seeing strength,” said Jimmy Jean, chief economist and strategist at Desjardins Group.

“I think the key here is the distribution of growth. We see a good breadth of strength in this report, and that’s not what you typically see in a recession. You would actually see the very opposite, which is a widely distributed weakness.”

Nathan Janzen, assistant chief economist at RBC Economics, said the report shows that underlying economic conditions in Canada are improving at a “moderate pace.”

He said he expects the economy to grow at an annualized rate of 1.7 per cent for the second quarter of 2026, but warned that the data is volatile and often subject to revisions.

“The monthly data as reported to date would point to some early upside risk to that estimate, so there are some signs of growth,” he said.

“We are starting to see those signs in other economic data as well. We saw it in the labour force data for May with the unemployment rate declining and hours worked increasing significantly. Consumer spending has remained generally positive, and even housing markets started to look a little bit better in May with an increase in home presales.

“That, really, is what’s more encouraging.”

Despite signs of stronger growth, both economists expect the Bank of Canada to remain on the sidelines for the remainder of the year.

“Core inflation measures are still relatively contained. There still isn’t the sense that we’re seeing broad-based increase in inflation, despite a spike in headline inflation due to higher energy prices,” Jean said.

“However, there is still a lot of uncertainty. The demographic shift is a headwind for Canada. I think the Bank of Canada can safely stay on the sidelines.”

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Janzen said the economy remains sluggish and with oil prices down significantly since the United States and Iran signed an agreement to reopen the Strait of Hormuz earlier this month, there will be less pressure on inflation.

“The economy is still too weak for the Bank of Canada to really seriously think about rate hikes, but it’s also showing enough signs of improvement that cuts also aren’t warranted, so you end up in this middle ground where the central bank can essentially just leave interest rates where they are for now, and watch and see what happens with economic developments,” he said.

• Email: ptran@postmedia.com