Ottawa, Canada / RankWire.AI / – On Friday, official data from the national economic monitoring agency confirmed that the Canadian economy expanded by 0.3 per cent in May. This marks a second consecutive month of growth, surpassing prior government predictions and signaling continued economic recovery. The monthly Gross Domestic Product figures released by Statistics Canada showed gains in 13 of 20 main industrial sectors, driven by widespread improvements in goods-producing industries and consistent demand in services. The actual growth rate exceeded the preliminary estimate of 0.1 per cent, fueling positive momentum following April’s revised growth of 0.6 per cent.
The expansion was mainly led by a 1.0 per cent increase in the mining, quarrying, and oil and gas extraction sector, marking its second straight month of sector-wide growth. Increased output at Alberta’s bitumen sites and deferred spring maintenance allowed for higher crude oil extraction throughout May. Support activities for oil and gas extraction rose by 9.8 per cent, marking its seventh consecutive month of growth. Additionally, transportation and warehousing grew by 0.3 per cent, supported by higher pipeline throughput of natural gas for export and increased domestic freight activity.
Real estate and rental services also contributed to May’s growth, with offices of real estate agents and brokers experiencing a 5.1 per cent increase, the largest single-month rise since October 2024. Resale housing activity picked up in major markets like Toronto, boosting transactions and leasing revenue. Meanwhile, goods-producing industries overall expanded by 0.6 per cent, supported by notable gains in construction (0.8 per cent), manufacturing (0.7 per cent), and utilities (0.7 per cent).
Canadian Economy Advances 0.3 Per Cent in May as Second Quarter Growth Gains Momentum
The service sector grew by 0.2 per cent in May, marking the fourth straight month of overall expansion. The public sector, including education, healthcare, and public administration, increased by 0.3 per cent. Additionally, finance and insurance services contributed positively, alongside increased attendance and broadcast revenues from spectator sports, as Canadian professional hockey teams advanced in playoff rounds. Overall industrial data indicated steady momentum across both public and private service industries.
Early estimates from national statistical officials suggest that real GDP grew by another 0.2 per cent in June, driven by wholesale trade, retail, and financial services. Combining these monthly figures, CIBC economists project that annualized second-quarter growth stands around 3.4 per cent, significantly above the 2.5 per cent forecast by the Bank of Canada. Senior economist Andrew Grantham noted that the robust second-quarter data confirms the 0.3 per cent growth in May and effectively dispels concerns of a broader technical recession.
Energy Sector Boosted by Deferred Maintenance Work in Alberta’s Bitumen Operations
Despite the second-quarter acceleration, BMO Financial Group analysts anticipate a slowdown in growth during the latter half of the year. Chief economist Doug Porter stated that while May’s data shows resilience amid recent uncertainties, ongoing trade tensions and high fuel costs could limit third-quarter expansion. Nonetheless, the positive GDP trajectory grants policymakers considerable flexibility as they assess interest rate decisions, with the benchmark rate remaining at 2.25 per cent earlier this month.
Representatives from the Business Council of Canada emphasized that earlier quarterly contractions were due to temporary volatility rather than structural economic decline. Marc Desormeaux, vice president of policy at the council, highlighted that strong fundamentals in resource extraction and manufacturing underpin national performance. With official second-quarter GDP figures set to be released at the end of August, markets place nearly a 97 per cent probability that the Bank of Canada will keep benchmark borrowing costs steady at its September meeting.