Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and setting a positive pace for the second quarter, as reported by Statistics Canada. The growth surpassed the initial estimate of 0.1% for the month. Statistics Canada noted that 13 out of 20 industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, driving growth for the second consecutive month. Maintenance work typically carried out during the month was completed ahead of schedule or postponed, leading to increased extraction activities. Additionally, transportation and warehousing sectors experienced growth, with pipelines facilitating the export of more natural gas.
Real estate agents’ offices were particularly active due to heightened home-selling activities, boosting the real estate, rental, and leasing sector. An early estimate for June suggests a 0.2% expansion in that month. Furthermore, with a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is on track for a robust second quarter of growth.
According to the advance estimate by Statistics Canada, real GDP is projected to increase by 3.4% on an annualized basis in the second quarter, rebounding strongly from a slight contraction in the first quarter. Despite concerns of a technical recession following the consecutive quarterly contractions, BMO chief economist Doug Porter emphasized that the recent data indicates an underlying resilience in the economy.
However, CIBC economist Andrew Grantham cautioned against reading too much into the quarterly figures, noting that they are subject to revisions. Grantham highlighted one-off factors, such as advanced oil maintenance and positive impacts from events like the FIFA World Cup, which likely influenced the second-quarter GDP growth. He anticipates a slightly slower growth trajectory in the upcoming months, with the economy gradually reducing slack. Grantham also predicted that the Bank of Canada would maintain interest rates unchanged for the rest of the year.