Canada’s economy expanded by 0.3% in May, extending growth for a second consecutive month and setting a positive trajectory for the economy in the second quarter, as per Statistics Canada. The growth exceeded the agency’s initial projection of 0.1% for the month.
Statistics Canada reported that 13 out of 20 industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the growth in May. The mining, quarrying, oil, and gas extraction sector saw a 1% increase, leading the growth for a second month in a row. Some maintenance activities typically done in May were completed early or delayed, allowing for more extraction.
Transportation and warehousing also saw an uptick, driven by increased natural gas exports facilitated by pipelines. Real estate agent offices experienced heightened activity, 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 track for a robust second quarter.
The advance estimate from the data agency indicates real GDP could rise by 3.4% on an annualized basis in the second quarter, rebounding strongly from a slight contraction in the first quarter. This turnaround allays fears of a technical recession following two consecutive quarters of annualized GDP decline.
BMO chief economist Doug Porter noted that the economy remains resilient despite previous concerns about a recession. CIBC economist Andrew Grantham cautioned against overinterpreting the quarterly figures, citing potential revisions and temporary factors like oil maintenance and the positive impact of events like the FIFA World Cup. Grantham anticipates a slower growth pace in the upcoming months and expects the Bank of Canada to maintain interest rates unchanged for the rest of the year.