Real gross domestic product declined 0.1% in April, Statistics Canada said Tuesday.

This follows drops of 0.3% in March and 0.1% in February, and more pronounced declines between November 2008 and January 2009.

The report, which was in line with consensus expectations, offered “no major surprises,” according to CIBC World Markets economist Krishen Rangasamy.

“While the pace of economic contraction is slowing, we’re not out of the woods just yet,” he said.

Declines in manufacturing, the energy sector and retail trade were the main contributors to the April decrease, StatsCan said.

Increases in the activities of real estate agents and brokers and wholesale trade mitigated the drop.

The declines in manufacturing (-1.0%) were widespread and worse than expected, with 15 of the 21 major groups contracting. Both durable (-0.4%) and non-durable goods (-1.8%) manufacturing retreated. In particular, the manufacturing of primary metal, petroleum and coal, food, paper and wood products all posted significant drops. Foreign demand remained weak.

The output of the energy sector retreated 0.5% in April. Significant declines in natural gas extraction, refining, coal mining, and pipeline transportation drew the sector down, StatsCan said.

Value added in retail trade fell 0.6% in April, as the volume of activities at food and beverage stores and new and used car dealers declined, however, the volume of wholesaling activities increased 0.5% in April.

Construction activity slipped 0.1% in April. A reduction in residential building construction eclipsed the increases in non-residential building construction and in engineering and repair work.

The finance and insurance sector was essentially unchanged in April. The gain in mutual fund sales was partially offset by a fall in the volume of trading on the stock exchanges, StatsCan said. Furthermore, residential mortgage loans went up significantly on the strength of the home resale market.

Economists expect further declines in GDP for May and June as auto plant shutdowns and a stronger loonie take a toll on economic growth.

“We have yet to reach the turning point,” said Douglas Porter, deputy chief economist at BMO Capital Markets. “We look for another drop in May output, and possibly for June as well before the economy begins to grind out some modest growth in July.”

CIBC World Markets economists are less optimistic about a pick-up in growth in the third quarter.

“We’re unlikely to see an end to this recession in the third quarter, given the persistence of anaemic demand both at home and abroad,” said Rangasamy. “At this point, we’re still aiming for a recovery in the final quarter of the year, helped mostly by a pick up in demand overseas.”

Industrial prices fall; raw materials prices rise

Separately, Stats Canada reported the Industrial Product Price Index fell 1.1% in May compared with April.

However, the Raw Materials Price Index rose 2.2% on the back of rising prices for crude oil. The IPPI was mainly pulled down by prices for vehicles and other transport equipment.

The Canadian dollar rose 6.4% in May in relation to its U.S. counterpart, StatsCan said.

The RMPI was affected by higher prices for mineral fuels.

The increase was primarily attributable to the 7.3% rise in the price of crude oil, StatsCan said.

IE