Canada’s economy expanded by 0.3% in May, marking the second consecutive monthly growth and setting the stage for a strong second quarter, as per data from Statistics Canada. The growth surpassed the initial estimate of 0.1% for the month. Notably, 13 out of 20 industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the positive performance.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, driving growth for the second month in a row. Maintenance activities that are typically carried out during this period were completed earlier or postponed, facilitating increased extraction. Additionally, transportation and warehousing sectors witnessed growth, supported by heightened natural gas transportation via pipelines.
Real estate agent offices experienced heightened activity in home sales, leading to a surge in the real estate and rental and leasing sector. An early projection for June suggests a 0.2% expansion in that month. With a slight upward revision of April’s GDP growth to 0.6%, the Canadian economy is poised for robust growth in the second quarter.
The advance estimate by Statistics Canada indicates a 3.4% rise in real GDP on an annualized basis for the second quarter, rebounding significantly from a mild contraction in the preceding quarter. Despite concerns of a technical recession following two consecutive quarters of GDP decline, BMO chief economist Doug Porter emphasized that the earlier weakness was overstated.
CIBC economist Andrew Grantham cautioned against reading too much into the quarterly figures, noting the likelihood of revisions. He highlighted temporary factors like advanced oil maintenance and positive impacts from events such as the FIFA World Cup as contributors to the second-quarter GDP growth. Grantham anticipated a slightly slower growth trajectory in the upcoming months, suggesting a gradual reduction in economic slack and a stable interest rate environment maintained by the Bank of Canada.