Canada’s GDP grew 0.2% in May, surpassing market expectations
Canada’s gross domestic product increased by 0.2% in May, exceeding market expectations thanks in part to manufacturing sector gains, and the economy likely expanded at a 2.2% annualized rate in the second quarter, data showed on Wednesday.
Analysts polled by Reuters had forecast GDP growth of 0.1% in the month, after the 0.3% rise in April.
In a preliminary estimate, Statistics Canada data showed GDP was likely up by 0.1% in June, helped by increases in the construction, real estate, rental and leasing, as well as finance and insurance sectors.
That estimate translates to a 2.2% annualized growth rate for the second quarter, faster than the Bank of Canada’s 1.5% forecast for the three months ended in June.
The central bank lowered its benchmark rate for a second straight month earlier in July, and indicated its focus was shifting to boosting the economy. The bank expects growth to pick up in the second half of 2024, led by stronger exports and a recovery in household spending as borrowing costs ease.
Growth in May was led by the manufacturing sector, which posted its largest gain since January 2023, and the educational services, health care and social assistance and public administration.
The opening of the expanded Trans Mountain pipeline in May also contributed to the growth, helping the pipeline transportation sector post a 0.6% gain in the month, Statscan said.
Gains were partially offset by contractions in the retail trade, wholesale trade as well as mining, quarrying and oil and gas extraction sectors.
The mining, quarrying and oil and gas extraction sector was weighed down mainly by the oil and gas extraction, which declined partially due to maintenance at some upgrading facilities in northern Alberta.
Overall, 15 of 20 sectors expanded in May, with Canada’s goods-producing sector gaining 0.4% and the services sector posting a 0.1% increase.
Wednesday’s monthly GDP report is based on Canada’s industrial output while quarterly figures, which will be released next month, are based on an alternate calculation and can differ.
This article was first reported by Reuters
