Canada’s economic growth accelerated in May by 0.3 percent, marking the second consecutive month of expansion and setting the stage for a robust second quarter, according to Statistics Canada. This surpassed the initial projection of 0.1 percent growth for the month. Thirteen out of twenty industrial sectors, such as construction, manufacturing, finance, insurance, and the public sector, contributed to the growth.
The mining, quarrying, oil, and gas extraction sector saw a 1 percent increase in May for the second month in a row. This growth was driven by the completion of maintenance work ahead of schedule, allowing for increased extraction. Additionally, transportation and warehousing sectors experienced growth as more natural gas was transported out of the country through pipelines.
Real estate offices were particularly active due to heightened home-selling activity, which boosted the real estate and rental and leasing sector. An early estimate for June indicates a projected 0.2 percent expansion for that month. With a slight upward revision of April’s GDP growth to 0.6 percent, the Canadian economy is on track for a strong second quarter.
Statistics Canada’s preliminary estimate suggests a 3.4 percent increase in real GDP on an annualized basis for the second quarter, a significant rebound from the slight contraction in the first quarter. While concerns about a technical recession emerged after two consecutive quarters of GDP contraction, BMO chief economist Doug Porter believes the previous economic weakness was overstated.
Despite the positive numbers, CIBC economist Andrew Grantham advises caution in interpreting the quarterly data, as revisions are common. Grantham anticipates a potential slowdown in growth in the upcoming months due to temporary factors like accelerated oil maintenance and the positive impact of the FIFA World Cup. He expects the Bank of Canada to maintain interest rates throughout the remainder of the year as economic slack diminishes gradually.