Canada’s economy expanded by 0.3 percent in May, marking the second consecutive month of growth and setting a solid pace for the second quarter, as reported by Statistics Canada. This growth exceeded the initial forecast of 0.1 percent growth for the month by the agency.
Statistics Canada indicated that 13 out of 20 industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains in May. The mining, quarrying, oil, and gas extraction sector saw a one percent increase, leading growth for a second consecutive month due to early or deferred maintenance work, facilitating increased extraction activities.
Additionally, the transportation and warehousing sector experienced growth, notably driven by increased natural gas exports through pipelines. Real estate agents’ offices witnessed heightened activity in home sales, consequently boosting the real estate and rental and leasing sector.
An early estimate for June suggests a 0.2 percent expansion in that month. With a slight upward revision of April’s GDP growth to 0.6 percent, the Canadian economy is poised for a robust second quarter performance.
According to the advance estimate by the data agency, real GDP is anticipated to rise by 3.4 percent on an annualized basis in the second quarter, rebounding sharply from a mild decline in the first quarter of the year. While concerns of a technical recession arose after two consecutive quarters of GDP contraction on an annualized basis, the latest figures suggest an underlying resilience in the economy, as highlighted by BMO chief economist Doug Porter.
Despite the positive growth outlook, policymakers are expected to approach the quarterly numbers cautiously, considering potential revisions and one-off factors that may have influenced GDP performance, such as early oil maintenance and the impact of events like the FIFA World Cup. CIBC economist Andrew Grantham anticipates a slightly slower growth trajectory in the upcoming months, emphasizing a gradual easing of economic slack and a consistent interest rate stance by the Bank of Canada throughout the year.
