Economy's growth beats expectations of Bay Street and Bank of Canada

, both of which prompted several economists to forecast another rate increase either next Wednesday or on July 12. Governor Tiff Macklem and his officials have held rates steady for the past two meetings while they assess whether their monetary policy stance is sufficiently restrictive to bring inflation to near the 2 per cent target at the end of 2024.Article content

In the first quarter, household spending rose 1.5 per cent for goods and 1.3 per cent for services, after minimal growth in the second half of last year. Expenditures on goods were driven by motor vehicles and clothing, while service spending was led by food and alcoholic beverage services as well as travel.

Exports of goods and services rose 2.4 per cent, led by passenger cars and light trucks. Imports edged up 0.2 per cent after a decline in the previous quarter.Compensation of employees rose 1.7 per cent, the largest quarterly growth since the second quarter of 2022, and increased in all provinces and territories.

Still, in contrast with lower disposable income, household consumption rose 5.7 per cent, the fastest pace since the second quarter of 2022. As a result, the household saving rate slid to 2.9 per cent, approaching the pre-pandemic level, which averaged 2.1 per cent in 2019. In March, growth was essentially unchanged after a 0.1 per cent increase a month earlier. Mining, quarrying, and oil and gas extraction increased 1.2 per cent, the third straight monthly gain, and the public sector continued its upward momentum with a 0.3 per cent gain.

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