Canada economy up 0.3% in May, most likely down 0.2% in June

OTTAWA (Reuters) – Canada’s economy grew by 0.3% in May, in line with expectations, as demand for services overshadowed the impact of raging wildfires on the energy sector, Statistics Canada data showed on Friday.

Analysts polled by Reuters had forecast a 0.3% month-over-month rise in May. April GDP was upwardly revised to 0.1% growth from an initial report of zero growth.

The gross domestic product however was expected to decline by 0.2% in June, indicating an annualized growth rate of 1% in the second quarter, Statscan said in a flash estimate.

The Bank of Canada has forecast a 1.5% annualized GDP rise in the quarter ended June. The central bank said earlier in July that pent-up demand for services and a tight labor marker were among factors driving the economy, as it raised its GDP growth forecast for this year.

A rebound in wholesale and public administration as well as gains in manufacturing and real estate sectors helped drive economic growth in May, Statscan said. Manufacturing posted its largest gain since October 2021, with both durable non-durable goods manufacturing increasing.

Those gains helped to more-than offset the largest decline in the energy sector since August 2020. Canada’s energy sector was severely impacted by raging wildfires in the main oil-producing province of Alberta and experienced broad declines.

Oil and gas extraction, excluding oil sands, dropped 6.6% as a result of the forest fires in Alberta, Statscan said.

Overall, Canada’s service-producing sectors expanded 0.5% in May, while the goods-producing sector posted a 0.3% contraction.

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