Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and positioning the economy for a strong second quarter, as reported by Statistics Canada. This growth exceeded the agency’s initial projection of 0.1% for the month. Thirteen out of twenty industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall increase.
The mining, quarrying, oil, and gas extraction sector saw a 1% rise in May, driving growth for the second month in a row. Maintenance work that is typically carried out during this period was either completed ahead of schedule or postponed, facilitating increased extraction activities. Transportation and warehousing also experienced growth, with pipelines facilitating greater natural gas exports.
Real estate agent offices saw heightened activity due to increased home sales, boosting the real estate and rental and leasing sector. An early estimate for June suggests a 0.2% expansion for that month. With a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is on course for a robust second quarter.
According to advance estimates from Statistics Canada, real GDP is projected to increase by 3.4% on an annualized basis in the second quarter, bouncing back strongly from a slight contraction in the first quarter. The earlier decline in GDP had raised concerns about a technical recession, but BMO chief economist Doug Porter stated that the recent data indicates the economy’s resilience.
While policymakers may not draw significant conclusions from the quarterly figures yet, CIBC economist Andrew Grantham cautioned that certain one-off factors, such as accelerated oil maintenance and positive impacts from events like the FIFA World Cup, likely contributed to the second-quarter GDP growth. Grantham anticipates a more moderate growth pace in the upcoming months, expecting the Bank of Canada to maintain interest rates at their current levels throughout the remainder of the year.