Ottawa, Canada / RankWire.AI / – On Friday, official national economic data confirmed that the Canadian economy expanded by 0.3 per cent in May. This marks the second month of ongoing economic recovery and surpasses earlier government predictions. As reported by Statistics Canada, monthly Gross Domestic Product figures revealed real output rose across 13 of 20 major industrial sectors. Gains were broad-based, driven by increases in goods-producing industries and sustained demand within the services sector. Notably, the actual growth rate for the month exceeded the preliminary flash estimate of 0.1 per cent, providing further momentum following April’s revised growth figure of 0.6 per cent.
The primary driver of May’s economic growth was a 1.0 per cent increase in the mining, quarrying, and oil and gas extraction sector, marking its second consecutive month of sector-wide expansion. Higher crude oil extraction volumes throughout May were supported by increased production at Alberta bitumen sites and deferred routine spring maintenance. Support activities for oil and gas extraction grew by 9.8 per cent, marking the sector’s seventh straight month of expansion. Additionally, transportation and warehousing activity rose by 0.3 per cent, bolstered by increased pipeline throughput for natural gas exports and higher domestic freight movement.
The real estate and rental services sector also contributed to the economic growth in May, with activity at real estate agent and broker offices jumping 5.1 per cent. This was the largest single-month increase for this subsector since October 2024. Resale housing markets in major cities like Toronto experienced a resurgence, boosting transaction volumes and rental income. Meanwhile, goods-producing industries overall grew by 0.6 per cent, supported by solid gains in construction (0.8 per cent), manufacturing (0.7 per cent), and utilities (0.7 per cent).
Canadian Economic Growth Accelerates to 0.3% in May, Boosting Second-Quarter Outlook
Industries within the services sector grew by 0.2 per cent in May, marking the fourth month in a row of overall expansion for this segment. The public sector, including education, healthcare, and public administration, expanded by 0.3 per cent. Financial services and insurance sectors also contributed positively, along with spectator sports, which saw increased attendance and broadcast revenue as Canadian professional hockey teams progressed through playoff rounds. Overall, service output maintained steady momentum across both public and private sectors.
Preliminary guidance from national statistical officials indicates that real GDP grew by an additional 0.2 per cent in June. This growth was driven by wholesale trade, retail, and financial services. Combining the latest monthly figures, CIBC economists estimate that the second-quarter annualized growth rate is approximately 3.4 per cent. This is notably higher than the 2.5 per cent forecast made by the Bank of Canada. Senior economist Andrew Grantham remarked that the strong second-quarter data confirms the Canadian economy grew 0.3 per cent in May, effectively ending discussions about a potential technical recession.
Energy Sector Expansion Driven by Deferred Maintenance in Alberta’s Bitumen Operations
Despite the acceleration in the second quarter, analysts at BMO Financial Group expect growth to slow during the latter half of the year. Chief economist Doug Porter explained that while May’s report highlights economic resilience amid recent uncertainties, ongoing trade tensions and high fuel prices could limit third-quarter growth. Nonetheless, the positive trajectory of GDP provides considerable flexibility for monetary policymakers as they assess interest rate strategies, especially after the central bank kept the benchmark rate at 2.25 per cent earlier this month.
Representatives from the Business Council of Canada emphasized that recent quarterly contractions were temporary and did not indicate a fundamental economic downturn. Marc Desormeaux, the council’s vice president of policy, pointed out that strong fundamentals in resource extraction and manufacturing continue to support the national bottom line. As the official second-quarter GDP figures are finalized for release at the end of August, financial markets currently assign a nearly 97 per cent probability that the Bank of Canada will maintain its current borrowing costs at the upcoming September policy meeting.