Canada’s economic expansion in May saw a 0.3% growth, marking the second consecutive month of positive growth and setting a solid pace for the country’s second quarter, as reported by Statistics Canada. This growth exceeded the initial estimate of 0.1% by the same agency. Out of 20 sectors, 13, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains for the month.
The mining, quarrying, oil, and gas extraction sector experienced a notable 1% increase in May, driving growth for the second month in a row due to early or deferred completion of maintenance work. Transportation and warehousing also saw growth, with increased natural gas transport facilitated by pipelines.
The real estate and rental sector experienced heightened activity with a surge in home sales, while an early estimate for June suggests an additional 0.2% expansion in the economy for that month. Additionally, Statistics Canada revised April’s GDP growth slightly upward to 0.6%, indicating a solid second quarter growth trajectory for the Canadian economy.
The advance estimate by the data agency forecasts a 3.4% rise in real GDP on an annualized basis for the second quarter, bouncing back sharply from a slight contraction in the first quarter of the year. Concerns of a technical recession were raised following two consecutive quarters of annualized GDP contraction, but BMO chief economist Doug Porter emphasized that the recent data suggests the earlier weakness was overstated.
While policymakers are cautious in interpreting the quarterly figures due to potential revisions, CIBC economist Andrew Grantham anticipates slower growth in the upcoming months. He attributes the boost in second-quarter GDP to temporary factors like advanced oil maintenance and positive impacts from events like the FIFA World Cup. Grantham predicts a gradual reduction in economic slack and expects the Bank of Canada to maintain interest rates throughout the remainder of the year.