Canada’s economic growth in May reached 0.3%, extending the country’s growth streak for a second consecutive month and setting the stage for a robust second quarter, as reported by Statistics Canada. The growth exceeded the agency’s initial projection of 0.1% for the month. Statistics Canada indicated that 13 out of 20 industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the growth in May.
The mining, quarrying, oil, and gas extraction sector experienced a 1% increase in May, marking its second consecutive month of growth. This growth was attributed to the completion of some maintenance work earlier than usual, allowing for increased extraction activities. Additionally, the transportation and warehousing sector saw growth, fueled by the enhanced transportation of natural gas via pipelines.
Real estate agent offices saw heightened activity due to increased home-selling transactions, resulting in a boost for the real estate and rental and leasing sector. An initial estimate for June suggests a 0.2% expansion for that month. Furthermore, with a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is poised for a solid second quarter of growth.
The advance estimate by the data agency indicates a 3.4% rise in real GDP on an annualized basis in the second quarter, marking a significant rebound from a mild contraction in the first quarter. Despite concerns of a technical recession following consecutive quarters of GDP contraction, the latest figures suggest that the economy is still progressing positively.
BMO’s chief economist, Doug Porter, emphasized that the earlier concerns about a technical recession were exaggerated, affirming the continued forward momentum of the economy. CIBC economist Andrew Grantham cautioned against reading too much into the quarterly numbers, noting potential revisions and temporary factors, such as oil maintenance and the FIFA World Cup, which may have artificially boosted GDP in the second quarter. Grantham anticipates a slower growth pace in the upcoming months, projecting the Bank of Canada to maintain interest rates unchanged for the remainder of the year.