Canada’s economic growth in May reached 0.3%, marking the second consecutive month of expansion and indicating a strong second quarter trajectory, as reported by Statistics Canada. This growth exceeded the agency’s initial forecast of 0.1% for the month. Key contributors to the growth in May were 13 out of 20 industrial sectors, including construction, manufacturing, finance, insurance, and the public sector.
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 completed ahead of time or postponed, facilitating higher extraction levels. Additionally, transportation and warehousing sectors experienced growth, with increased natural gas exports through pipelines.
The real estate and rental and leasing sector saw heightened activity, particularly in real estate agent offices, due to increased home-selling activities. An early projection for June suggests a 0.2% expansion, indicating a positive trend for the Canadian economy. Statistics Canada also revised April’s GDP growth slightly upward to 0.6%, positioning the economy for a robust second quarter.
The agency’s advance estimate indicates a 3.4% annualized increase in real GDP for the second quarter, rebounding strongly from a slight decline in the first quarter. While concerns of a technical recession arose after two consecutive quarters of GDP contraction, BMO chief economist Doug Porter believes the earlier economic weakness was overstated.
CIBC economist Andrew Grantham cautions against reading too much into the quarterly numbers, noting potential revisions and temporary factors like oil maintenance and the positive impact of events such as the FIFA World Cup on second-quarter GDP growth. Grantham anticipates a slower growth pace in the coming months, suggesting a gradual reduction in economic slack and the likelihood of the Bank of Canada maintaining interest rates throughout the year.