Canada’s economic growth in May continued for a second consecutive month, expanding by 0.3%, as reported by Statistics Canada. This surpassed the initial projection of a 0.1% growth for the month. Various sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the overall growth, with 13 out of 20 industrial sectors showing positive gains.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, marking its second consecutive month of growth. Transportation and warehousing also saw an uptick, driven by increased natural gas exports facilitated by pipelines. Real estate activities were notably busy, boosting the real estate and rental and leasing sector.
An early estimate for June suggests a 0.2% expansion in that month. Furthermore, April’s GDP growth was revised up to 0.6%, positioning the Canadian economy for a strong second quarter. Statistics Canada’s advance estimate indicates a 3.4% annualized real GDP growth in the second quarter, rebounding from a mild contraction in the previous quarter.
While concerns of a technical recession arose following two consecutive quarters of GDP contraction on an annualized basis, BMO chief economist Doug Porter believes the economy is still progressing positively. However, CIBC economist Andrew Grantham cautions that one-off factors like oil maintenance and the FIFA World Cup may have temporarily boosted GDP, implying a potential slowdown in the upcoming months.
Despite the positive growth outlook, policymakers are expected to monitor the situation cautiously, with Grantham predicting a gradual fading of economic slack and the Bank of Canada maintaining interest rates for the rest of the year.