Canada’s economy expanded by 0.3% in May, marking two consecutive months of growth and positioning the economy for a strong second quarter, as per Statistics Canada. This growth surpassed the agency’s initial forecast of 0.1% for the month. Statistics Canada reported that 13 out of 20 industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the growth in May.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, driving growth for a second consecutive month. Maintenance work usually scheduled for the month was either completed early or postponed, facilitating increased extraction. Additionally, transportation and warehousing sectors saw growth as pipelines facilitated greater natural gas exports.
Real estate agent offices experienced heightened activity due to increased home sales, boosting the real estate and rental and leasing sector. An initial estimate for June suggests a 0.2% expansion in the economy for that month. With a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is on course for a robust second quarter.
Statistics Canada’s advance estimate indicates a 3.4% annualized real GDP growth in the second quarter, rebounding sharply from a slight contraction in the first quarter. While concerns of a technical recession arose following two consecutive quarters of GDP contraction on an annualized basis, BMO chief economist Doug Porter believes the earlier weakness was overstated.
CIBC economist Andrew Grantham cautions against overinterpretation of the quarterly numbers, citing potential revisions and one-off factors like advanced oil maintenance and positive impacts from events like the FIFA World Cup that likely influenced second-quarter GDP growth. Grantham anticipates a slower growth pace in the forthcoming months, projecting the Bank of Canada to maintain interest rates steady throughout the year.
