Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and setting a positive course for the second quarter, as per Statistics Canada. This growth exceeded the agency’s initial projection of 0.1% for the month. Various sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall increase, with 13 out of 20 industrial sectors showing gains.
The mining, quarrying, oil, and gas extraction sector saw a 1% rise in May, leading growth for the second month in a row. Transportation and warehousing also increased, driven by increased natural gas transportation via pipelines. Real estate activities were notably brisk, with a surge in home sales boosting the real estate and rental and leasing sector.
An early estimate for June suggests a 0.2% expansion in that month. Additionally, April’s GDP growth was revised upward to 0.6%, positioning the Canadian economy for a strong second quarter. The advance estimate by Statistics Canada indicates a 3.4% annualized growth in real GDP for the second quarter, rebounding sharply from a slight contraction in the first quarter.
Despite concerns of a technical recession earlier in the year, BMO chief economist Doug Porter believes the recent data indicates that the economy is still progressing positively. CIBC economist Andrew Grantham cautions against reading too much into the quarterly figures, citing potential revisions and one-off factors like oil maintenance and the FIFA World Cup impact. Grantham anticipates a slower growth trajectory in the coming months, suggesting a gradual reduction in economic slack and a stable interest rate environment maintained by the Bank of Canada.
Overall, the latest economic data reflects a resilient Canadian economy with promising growth prospects in the near term.