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Shoppers walking on Bay Street in Toronto.Fred Lum/The Globe and Mail

Canada's economy broke out of its winter doldrums and returned to modest growth in April, in a broad-based rebound led by strong manufacturing output, healthy consumer demand and growing government spending.

Statistics Canada reported Thursday that real (i.e. inflation-adjusted) gross domestic product edged up 0.1 per cent month over month, the first positive month since the short-lived growth spurt of January. Real GDP fell 0.2 per cent in March and 0.1 per cent in February.

The April figure was in line with economists' forecasts.

Statscan said manufacturing output grew 0.4 per cent in the month, while both wholesale and retail sales were up 0.2 per cent. The real estate sector grew 0.5 per cent, and accommodation and food services rose 0.4 per cent. Public administration rose 0.5 per cent, evidence of the step-up in spending under the new Liberal government in Ottawa.

The numbers were hurt by a 2.4 per cent drop in oil and gas extraction, including a 7.3-per-cent slump in non-conventional oil. That decline reflected maintenance shutdowns in oil sands upgraders, and predated the massive wildfires in northern Alberta, which hit in early May. Those fires severely disrupted oil sands production, and are likely to be a significant drag on the May GDP numbers, which won't be released until late next month.

"It's a welcome bounce from a soft end to the first quarter, but it will only be temporary relief as the impact of the Alberta wildfires loom," said Canadian Imperial Bank of Commerce economist Nick Exarhos in a research note.

The Bank of Canada estimated in late May that the impact from the wildfires would slice about 1.25 percentage points off annualized GDP growth in the second quarter – likely enough to put GDP in the red for the quarter as a whole. However, economists noted that since oil sands production was already slowed by maintenance in April, the fires might not have reduced output by quite as much as previously thought, so the reduction to GDP might prove somewhat smaller than earlier estimates.

Nevertheless, economists are bracing for a slump in GDP of as much as 1 per cent in the May figures, although note that the downturn should be temporary. As oil output recovers from the shutdowns and the city of Fort McMurray starts rebuilding from the damage from the fires, economic growth should bounce back sharply from the second-quarter weakness.

"A return to near-normal production levels in the third quarter will spur a bounce in growth of over 4 per cent in the next quarter," said Bank of Montreal chief economist Douglas Porter in a report.

Statscan noted that April's GDP was also hurt by the failure of any of Canada's seven National Hockey League teams to make the playoffs. The arts, entertainment and recreation sector fell 3.9 per cent in the month.

"Our month of infamy," Mr. Porter said. "Had a few teams actually made it, that headline GDP result of plus-0.1 per cent would have likely read plus-0.2 per cent. Wait 'til next year."

Separately, Statscan also released its Survey of Employment, Payrolls and Hours, providing more detail about the state of the country's labour market in April. The survey showed that non-farm payroll employment rose a solid 18,000 in the month, slightly weaker than the 23,000 reported in the April Labour Force Survey, which is a more timely gauge of employment but is generally considered less accurate than the SEPH. Over the past 12 months, payroll employment was up 139,000, or 0.9 per cent.

But wages took a step backward, as average weekly earnings slipped 0.3 per cent in the month. Average earnings were up a slim 0.2 per cent year over year. In Alberta, where the oil slump has weighed heavily on the economy, average earnings were down 2.4 per cent from a year earlier.

The country's average work week was 32.9 hours in April, unchanged from March and down from 33.1 hours a year earlier.