Canada GDP May 2018


Canada: GDP growth bounces back in May

July 31, 2018

Canada’s economy topped expectations in May, growing 0.5% in monthly terms (April: +0.1% month-on-month s.a.) as most industrial sectors posted gains. According to Statistics Canada, growth was driven by stronger extractives output along with across-the-board gains in the services sectors.

May’s upswing notched gains across 19 of the 20 included industrial sectors. Goods-producing industries posted stronger output from a month earlier as the mining and quarrying sector got back to work following maintenance- and upgrade-related shutdowns. Meanwhile, the construction sector was busy following the return to normal springtime temperatures. Moreover, services-producing industries also benefited from the warmer weather, with both retail and wholesale trade shooting up. On the other hand, real-estate activity slowed in the month as home sales fell in British Columbia.

On an annual basis, growth ticked up to 2.6% from 2.5% a month earlier. Annual average growth dipped to 3.2% from April’s seven-year high of 3.4%.

Cheering May’s outturn, Brian DePratto, Senior Economist at TD Economics, noted:

“Nice! The Canadian economy truly thawed in May, as maintenance- and weather-related softness was shaken off in an impressive monthly performance. For the Bank of Canada, it is unlikely that today's data alters their narrative – they, like us, had already penciled in a robust Q2. Clearly then, while it may not be right around the corner, […] more monetary tightening will be forthcoming.”

In July, the Bank of Canada revised its 2018 GDP growth forecast to 2.0% and its 2019 GDP growth forecast to 2.2%. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.1% in 2018, which is unchanged from last month’s forecast. For 2019, our panelists expect growth to moderate to 1.9%.


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Canada GDP Chart

Canada Monthly GDP May 2018

Note: Month-on-month changes of seasonally-adjusted GDP and year-on-year variation in %.
Source: Statistics Canada (SC) and FocusEconomics calculations.

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