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.”