Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and setting a solid pace for the second quarter, as per Statistics Canada. This growth surpassed the initial estimate of 0.1% by the agency. Thirteen out of twenty industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the economic gains during the month.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, leading growth for the second month in a row. Notably, some maintenance work typically carried out in May was done earlier or postponed, which facilitated more extraction activities. Additionally, transportation and warehousing sectors saw growth, driven by increased natural gas transportation via pipelines.
Real estate agents’ offices experienced heightened activity due to increased home sales, boosting the real estate and rental and leasing sector. An initial estimate for June suggests a 0.2% expansion in that month, while April’s GDP growth was revised slightly upward to 0.6%, positioning the Canadian economy for a robust second quarter.
Statistics Canada’s preliminary estimate indicates a 3.4% annualized real GDP growth in the second quarter, indicating a significant rebound from a slight contraction in the preceding three months. Despite concerns of a technical recession following two consecutive quarters of GDP contraction, BMO chief economist Doug Porter believes that the economy is still progressing positively.
CIBC economist Andrew Grantham anticipates policymakers to approach the quarterly data cautiously, considering potential revisions. He attributes some temporary factors, such as advanced oil maintenance and the positive impact of the FIFA World Cup, to the second-quarter GDP boost. Grantham predicts a slightly slower growth trajectory in the upcoming months, with the expectation that the Bank of Canada will maintain interest rates unchanged for the remainder of the year.