Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and setting a positive trajectory for the second quarter, as per Statistics Canada. This growth exceeded the initial projection of 0.1% for the month. Statistics Canada reports that 13 out of 20 industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains in May.
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 that is typically conducted in May was either completed earlier or postponed, facilitating increased extraction activities. Additionally, transportation and warehousing sectors experienced growth, with pipelines facilitating the transportation of more natural gas to the market.
The real estate and rental and leasing sector saw heightened activity, particularly in offices of real estate agents, due to increased home-selling transactions. An initial estimate for June suggests a 0.2% expansion in 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 of growth.
Statistics Canada’s preliminary estimate indicates a 3.4% annualized increase in real GDP for the second quarter, rebounding strongly from a slight contraction in the first quarter. Despite concerns of a technical recession following two consecutive quarters of GDP decline, BMO chief economist Doug Porter stated that the recent data demonstrates that the earlier weakness was overstated.
CIBC economist Andrew Grantham cautioned against reading too much into the quarterly figures, noting that revisions are common. He highlighted temporary factors such as accelerated oil maintenance and positive impacts from events like the FIFA World Cup that likely boosted second-quarter GDP. Grantham anticipates a slightly slower growth pace in the upcoming months and expects the Bank of Canada to maintain interest rates at the current level throughout the year.