Canada’s economy expanded by 0.3% in May, marking the second consecutive monthly growth and setting a positive trajectory for the second quarter, as reported by Statistics Canada. This growth exceeded the agency’s initial projection of 0.1% for the month.
Statistics Canada indicated that 13 out of 20 industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains for the month. The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, driving growth for a second month in a row. Notably, some maintenance work typically scheduled for the month was completed earlier or postponed, facilitating increased extraction activities.
Additionally, the transportation and warehousing sectors experienced growth, attributed to heightened natural gas exports facilitated by pipeline operations. The real estate and rental and leasing sector also saw increased activity, particularly in real estate agent offices due to a surge in home sales.
An early estimate for June suggests a 0.2% expansion in that month, further bolstering the positive outlook for the Canadian economy in the second quarter. With a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is poised for solid growth in the second quarter.
The advance estimate from the data agency indicates a 3.4% annualized increase in real GDP for the second quarter, signaling a significant rebound from a mild contraction in the preceding three months. Despite concerns of a technical recession following consecutive quarters of GDP contraction, the latest figures indicate that earlier economic weaknesses were overstated, according to BMO chief economist Doug Porter.
CIBC economist Andrew Grantham cautioned against drawing hasty conclusions from the quarterly numbers, noting that revisions are common. He also pointed out that certain temporary factors, such as advanced oil maintenance and positive impacts from events like the FIFA World Cup, may have influenced second-quarter GDP growth. Grantham anticipates a more moderate growth pace in the upcoming months, suggesting a gradual reduction in economic slack and a likely continuation of stable interest rates by the Bank of Canada throughout the remainder of the year.