In the first quarter of 2024, Canada’s real gross domestic product (GDP) demonstrated a modest recovery, growing by 0.4% following a stagnant fourth quarter in 2023. This growth, driven primarily by increased household spending on services, underscores the nuanced dynamics of the nation’s economy amid ongoing global uncertainties.
Household spending rose by 0.7% in Q1 2024, with a notable 1.1% increase in services, which include telecommunications, rent, and air transport. This surge was slightly offset by a modest 0.3% rise in spending on goods, mainly new trucks, vans, and SUVs. Despite this overall increase, per capita household consumption expenditures saw a minimal rise of 0.1%, marking a halt to the previous three quarters of decline. Specifically, per capita spending on services grew by 0.5%, while spending on goods continued its downward trend for the tenth consecutive quarter.
The first quarter witnessed a 0.5% increase in exports of goods and services, led by significant contributions from unwrought gold, silver, and platinum group metals, primarily exported to the United Kingdom and Switzerland. However, this was tempered by decreased exports of passenger cars, light trucks, and crude oil. On the import side, goods and services edged up by 0.4%, driven by clothing, footwear, textile products, and electrical goods. Yet, the gains were partially offset by declines in the import of passenger cars and light trucks due to reduced global production.
Business capital investment saw an uptick of 0.8% in Q1, propelled by higher spending on engineering structures in the oil and gas sector and a 1.6% rise in machinery and equipment investments. Housing investment also increased slightly by 0.3%, mainly driven by a 7.1% rise in ownership transfer costs, reflecting heightened resale activity in Ontario, British Columbia, and Quebec. Conversely, new housing construction remained relatively flat, with minor growth observed in specific dwelling types like double houses.
Businesses continued to accumulate non-farm inventories, albeit at a slower pace than the previous quarter. The stock-to-sales ratio stood at 1.1, indicating a balanced inventory level relative to sales. The GDP deflator decreased by 0.3%, primarily due to a 1.3% fall in export prices, while household consumption prices experienced their smallest increase since Q2 2020, rising by 0.5%.
Employee compensation grew by 1.5% in Q1, outpacing the 0.9% rise in Q4 2023. This increase was particularly pronounced in the services-producing industries, which grew by 1.8%. The educational services sector saw the most significant wage growth at 5.9%, largely attributed to strike actions in Quebec in the previous quarter. Conversely, wages in federal government public administration fell by 6.4%, following substantial retroactive payments in the previous quarter.
The household savings rate climbed to 7.0%, the highest since early 2022, driven by a 1.8% increase in disposable income, outstripping the 1.2% rise in consumption expenditure. Investment income saw a robust 4.0% growth, benefiting from higher returns on interest-bearing instruments and dividends, favoring higher-income households.
Corporate incomes contracted by 4.9% in Q1 2024 after a 2.4% rise in the previous quarter. This decline was mainly due to reduced operating surpluses in the non-financial sector, especially within the oil and gas industries, which faced price drops. Meanwhile, financial corporations saw a slight 0.3% increase in their gross operating surplus, driven entirely by charter banks.