Canadian GDP climbed 0.3% in May, Statistics Canada says

2023-07-28 22:35:57

The Canadian economy grew 0.3% in May, Statistics Canada announced Friday.

In its latest economic growth report, a preliminary estimate from the federal agency suggests that real gross domestic product (GDP) grew at an annualized rate of 1% in the second quarter.

The May figure is slightly below Statistics Canada’s expectations as mining, oil and gas companies scaled back activity in Alberta at the start of the record wildfire season.

The energy sector fell 2.1% in May, according to the federal agency.

“This is the first drop in five months and the steepest since August 2020,” Statistics Canada said.

The modest increase in GDP in May was due, in part, to a rebound in the federal public administration sector, with most striking federal public servants returning to work at the end of April. However, 35,000 Canada Revenue Agency workers went on strike for three days in May, stalling the recovery.

This modest growth is unlikely to continue, as the federal agency’s preliminary estimate for June suggests the economy contracted 0.2% last month. These figures will be revised by their official publication, in a month.

The Bank of Canada’s key interest rate is 5%, its highest level since 2001. Rising interest rates are expected to slow the economy, but the economy has generally done better than expected since the beginning of the year.

According to Statistics Canada, the decline announced by the preliminary estimate for June will be mainly attributable to the wholesale trade and manufacturing sectors.

Both sectors saw growth in May as semiconductor chip supply chain issues eased, but the downtrend in June is expected to ‘more than (offset) the gains seen in May “, said the agency.

Despite high interest rates, the real estate sector should continue to grow in June.

In May, home resale activity in most of Canada’s largest markets led to a 7.6% increase in the industry.