Statistics Canada says the Canadian economy remained essentially unchanged in April, following a slight uptick in March.
The April figure came in lower than expected by Statistics Canada as services-producing industries were unchanged while goods-producing industries edged up 0.1%.
The federal agency's advance estimate for May however suggests real gross domestic product grew 0.4% last month, led by the manufacturing and wholesale trade sectors.
The Canadian economy is expected to slow in the latter half of this year and could potentially enter a downturn as high interest rates weigh on consumers and businesses.
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Yet BMO chief economist Douglas Porter said April's GDP release had multiple redeeming qualities despite the "soggy'' reading.
"The bigger picture is that the Canadian economy is managing to keep its head above water in the face of many challenges,'' he said in a client note.
Although GDP was flat for April, it showed strengths, such as the flash reading for May, Porter said.
The "hot'' 0.4% growth forecasted for May suggests the economy is "regaining some momentum, rather than fading into summer,'' he said.
In April, Statistics Canada reported that mining, quarrying, and oil and gas extraction grew 1.2% as all subsectors climbed – the fourth consecutive month of growth in the sector.
Wholesale trade contracted for the third consecutive month in April, falling 1.4% as activity declined in six of nine subsectors.
Canada's public sector also contracted as a strike by federal workers reduced activity in April, Statistics Canada said.
The public sector, which includes educational services, health care and social assistance and public administration, slipped 0.3% in April, the agency said.
While both educational services and health care and social assistance remained flat, public administration recorded a decline of 1%, the largest since April 2020.
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At the federal level, a strike by Public Service Alliance of Canada workers lead to a 4.3% contraction in federal government public administration, with the exception of the defence sector.
Porter with BMO said April's flat reading given the massive federal civil servant strike "is far from a bad result at the end of the day.''
"Even with one of the largest strikes in years in April, the economy did not decline,'' he said. "The economy has not yet seen one negative monthly reading so far in 2023, an impressive result given the widespread calls for recession at the start of the year.''
Meanwhile, construction activity grew 0.4% in April, as lower residential building construction was more than offset by broad-based increases in other types of construction.
The real estate and rental and leasing sector grew for a sixth consecutive month, expanding 0.5% in April – the sector's largest growth rate since December 2020.
The manufacturing sector declined 0.6% in April, down for the first time in four months, as both durable and non-durable goods manufacturing were down in the month.
Transportation and warehousing was up 0.4% for the second consecutive month as six of nine subsectors increased in April.