Canada’s economic growth in May reached 0.3%, marking the second consecutive month of expansion and positioning the economy for a robust second quarter, as reported by Statistics Canada. This growth surpassed the agency’s initial projection of 0.1% for the month. Thirteen out of twenty industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the positive performance in May.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, leading growth for a second consecutive month. Additionally, transportation and warehousing activities expanded, driven by increased natural gas transportation via pipelines. Real estate agents experienced heightened activity due to increased home sales, boosting the real estate and rental and leasing sector.
A preliminary estimate for June suggests a 0.2% expansion in that month, further supporting a solid second quarter of growth. The revised figure for April’s GDP growth, now at 0.6%, also contributes to the positive outlook for the Canadian economy.
The advance estimate by Statistics Canada projects a 3.4% rise in real GDP on an annualized basis for the second quarter, signaling a significant rebound from the slight contraction in the first quarter of the year. Despite concerns of a technical recession following consecutive quarterly GDP contractions, experts like BMO’s chief economist Doug Porter believe that the recent data indicates the underlying economy’s resilience.
CIBC economist Andrew Grantham cautions against overinterpreting the quarterly numbers, citing the likelihood of revisions and temporary factors influencing growth, such as early oil maintenance and positive impacts from events like the FIFA World Cup. Grantham anticipates a slightly slower growth trajectory in the upcoming months and expects the Bank of Canada to maintain interest rates unchanged for the rest of the year.