Canada’s economic growth expanded by 0.3% in May, marking the second consecutive month of growth and setting a strong pace for the second quarter, 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, including 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 1% increase in May, driving growth for the second month in a row. Some routine maintenance work was completed earlier or postponed, facilitating increased extraction activities. Transportation and warehousing sectors also saw growth, with pipelines facilitating the flow of more natural gas to the market.
Real estate agents’ offices experienced heightened activity due to increased home-selling transactions, boosting the real estate and rental and leasing sector. An initial estimate for June indicates a projected 0.2% expansion that month. With a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is positioned for a robust second quarter.
Statistics Canada’s advance estimate suggests a 3.4% annualized real GDP growth rate for the second quarter, rebounding sharply from a minor contraction in the first quarter. While concerns of a technical recession arose following consecutive quarterly GDP contractions, BMO chief economist Doug Porter believes the recent data reveal an economy still progressing steadily.
CIBC economist Andrew Grantham cautioned against reading too much into the quarterly figures, citing potential revisions and temporary factors like early oil maintenance and positive impacts from events such as the FIFA World Cup that may have bolstered second-quarter GDP growth. Grantham anticipates a slightly slower growth trajectory in the upcoming months, with a gradual easing of economic slack and the likelihood of the Bank of Canada maintaining interest rates unchanged for the remainder of the year.