Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and positioning the economy for a robust second quarter, as reported by Statistics Canada. This growth exceeded the agency’s initial projection of 0.1% for the month.
Statistics Canada indicated that 13 out of 20 industrial sectors played a role in the month’s advancement, with segments such as construction, manufacturing, finance, insurance, and the public sector contributing to the gains. The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, leading growth for the second consecutive month due to advanced or deferred maintenance work, facilitating increased extraction activities. Additionally, transportation and warehousing sectors experienced growth, driven by heightened natural gas exports facilitated by pipeline operations.
The real estate and rental and leasing sector witnessed heightened activity, particularly in real estate agent offices, attributable to increased home-selling transactions. An early estimate for June suggests a 0.2% expansion, positioning the economy for continuous growth. With a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy appears set for a solid second quarter.
While concerns of a technical recession arose following two consecutive quarters of GDP contraction on an annualized basis, the latest figures reveal an economic rebound. BMO chief economist Doug Porter highlighted that the earlier economic weakness may have been overstated. However, CIBC economist Andrew Grantham cautioned against overinterpretation of the quarterly numbers, citing potential revisions and temporary factors such as oil maintenance and positive impacts from events like the FIFA World Cup.
Grantham anticipates a slightly slower growth pace in the forthcoming months, expecting the Bank of Canada to maintain interest rates throughout the year, considering the gradual fading of economic slack.