Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and setting the stage for a robust second quarter, as reported by Statistics Canada. This growth exceeded the initial projection of 0.1% for the month. Out of 20 industrial sectors, 13, including 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 a second month in a row. Transportation and warehousing also experienced growth, with pipelines facilitating increased natural gas exports. Real estate agent offices were notably busy due to heightened home-selling activity, boosting the real estate and rental and leasing sector.
An early estimate for June suggests a 0.2% expansion, maintaining the positive momentum. Additionally, April’s GDP growth was revised upward to 0.6%, positioning the Canadian economy for a solid second quarter.
The advance estimate from the data agency indicates a 3.4% annualized increase in real GDP for the second quarter, rebounding sharply from a slight contraction in the first quarter. Although concerns of a technical recession arose following two consecutive quarters of annualized GDP decline, experts like BMO chief economist Doug Porter believe the recent numbers reflect an economy still moving forward.
CIBC economist Andrew Grantham cautions against drawing firm conclusions from the quarterly data, citing potential revisions and temporary factors like maintenance activities and sporting events influencing GDP growth. Grantham anticipates a slight slowdown in growth in the upcoming months, suggesting a gradual reduction in economic slack and the likelihood of the Bank of Canada maintaining interest rates steady for the remainder of the year.