Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and indicating a strong second quarter, as reported by Statistics Canada. This growth surpassed the initial estimate of 0.1% for the month.
Contributing to the gains were 13 out of 20 industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector. The mining, quarrying, oil, and gas extraction sector saw a 1% increase, driven by early or deferred maintenance work that facilitated more extraction activities.
Additionally, transportation and warehousing sectors grew due to increased natural gas transportation via pipelines. Real estate agents’ offices were notably active, 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 appears to be on a solid growth trajectory for the second quarter.
The advance estimate by Statistics Canada indicates a 3.4% annualized real GDP growth for the second quarter, a significant rebound from the mild contraction in the first quarter. This positive data dispels concerns of a technical recession earlier this year.
BMO chief economist Doug Porter expressed that the economy is still progressing despite previous concerns over a recession. However, CIBC economist Andrew Grantham cautioned that one-off factors, like oil maintenance activities and the FIFA World Cup, may have temporarily boosted GDP in the second quarter, suggesting a more moderate growth outlook in the near future.
Grantham anticipates a gradual reduction in economic slack and expects the Bank of Canada to maintain interest rates throughout the year.
