Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and setting a strong pace for the second quarter, as reported by Statistics Canada. This growth surpassed the initial projection of 0.1% for the month. Among the 20 industrial sectors, 13, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains.
The mining, quarrying, oil, and gas extraction sector saw a 1% increase in May, leading the growth for a second straight month. Maintenance work typically scheduled for the month was either completed earlier or postponed, allowing for increased extraction. Transportation and warehousing also experienced growth, driven by increased natural gas exports facilitated by pipelines.
The real estate and rental and leasing sector witnessed heightened activity, particularly in real estate agent offices due to a surge in home sales. An initial estimate for June suggests a 0.2% expansion, maintaining the positive trajectory. Furthermore, Statistics Canada revised April’s GDP growth slightly upward to 0.6%, indicating a solid second quarter performance.
The advance estimate by the data agency indicates real GDP growth of 3.4% on an annualized basis for the second quarter, rebounding sharply from a slight contraction in the preceding quarter. Concerns of a technical recession arose following two consecutive quarters of annualized GDP decline in 2026, but BMO chief economist Doug Porter dismissed these worries, highlighting the underlying resilience of the economy.
While policymakers are likely to remain cautious given the potential for revisions in the numbers, CIBC economist Andrew Grantham anticipates a modest slowdown in growth in the near future. Grantham attributes some of the second-quarter GDP boost to temporary factors like advanced oil maintenance and positive effects from events like the FIFA World Cup. He foresees a gradual reduction in economic slack and expects the Bank of Canada to maintain interest rates unchanged for the remainder of the year.