Canada’s economy expanded by 0.3% in May, marking the second consecutive monthly growth and setting a positive trajectory for the second quarter, as per Statistics Canada. This growth exceeded the initial projection of 0.1% by Statistics Canada. Out of 20 industrial sectors, 13, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall growth.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, leading the growth for a second successive month. Some maintenance work typically scheduled for the month was either completed early or postponed, facilitating higher extraction levels. Additionally, transportation and warehousing activities rose due to increased natural gas transportation through pipelines.
Real estate agent offices experienced increased activity in home sales, boosting the real estate and rental and leasing sector. An initial estimate for June suggests a 0.2% expansion in that month. With a slight upward revision in April’s GDP growth to 0.6%, the Canadian economy appears poised for a robust second quarter.
According to the advance estimate by the data agency, real GDP is anticipated to increase by 3.4% on an annualized basis in the second quarter, rebounding sharply from a slight contraction in the first quarter. Despite concerns of a technical recession earlier in the year, BMO chief economist Doug Porter emphasized that the underlying economy is continuing to progress positively.
CIBC economist Andrew Grantham noted that policymakers are unlikely to base significant decisions on the quarterly numbers, given the likelihood of revisions. Grantham highlighted temporary factors like deferred oil maintenance and positive impacts from events like the FIFA World Cup as contributors to the second-quarter GDP growth, predicting a slower growth pace in the upcoming months. He also expects the Bank of Canada to maintain interest rates unchanged for the rest of the year, citing a gradual reduction in economic slack.