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. The growth exceeded the initial estimate of 0.1% for the month. Statistics Canada reported that 13 out of 20 industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the growth in May.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, leading the growth for the second straight month. Transportation and warehousing also experienced growth, driven by increased natural gas transportation through 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. Additionally, Statistics Canada revised April’s GDP growth slightly upward to 0.6%, positioning the Canadian economy for a strong second quarter.
The advance estimate from the data agency indicates a 3.4% annualized real GDP growth in the second quarter, rebounding sharply from a mild contraction in the first quarter. BMO chief economist Doug Porter noted that the recent numbers indicate that concerns about a technical recession earlier in the year were exaggerated.
CIBC economist Andrew Grantham cautioned that policymakers should not overreact to these quarterly figures, given the potential for revisions. He also mentioned that one-off factors, such as accelerated oil maintenance and positive impacts from events like the FIFA World Cup, likely contributed to the second-quarter GDP growth. Grantham anticipated a slower growth trajectory in the subsequent months, with the economy gradually tightening and the Bank of Canada expected to maintain interest rates throughout the year.