Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and indicating a strong second quarter trajectory, as reported by Statistics Canada. This growth exceeded the agency’s initial projection of 0.1% for the month. A total of 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 month in a row. Maintenance work typically scheduled for the month was either advanced or postponed, facilitating increased extraction activities. Transportation and warehousing also saw growth, with pipelines facilitating the export of more natural gas.
The real estate and rental and leasing sector experienced heightened activity, particularly in real estate agent offices due to increased home-selling transactions. An early estimate for June suggests a 0.2% expansion for that month. Additionally, Statistics Canada revised April’s GDP growth slightly upward to 0.6%, positioning the Canadian economy for a robust second quarter.
The advance estimate from the data agency indicates a 3.4% rise in real GDP on an annualized basis for the second quarter, rebounding significantly from a slight contraction in the first quarter of the year. Despite concerns of a technical recession following two consecutive quarters of GDP contraction, BMO chief economist Doug Porter emphasized that the earlier economic weakness was overstated.
CIBC economist Andrew Grantham noted that policymakers may not place significant weight on the quarterly figures yet, as they are subject to revisions. Grantham highlighted some one-off factors, such as oil maintenance rescheduling and positive impacts from events like the FIFA World Cup, which likely contributed to the second-quarter GDP boost. He anticipates a slightly slower growth pace in the upcoming months, with gradual economic slack reduction and the Bank of Canada maintaining interest rates steady for the remainder of the year.