Canada: GDP shrinks in May
July 29, 2011
In May, GDP contracted a seasonally adjusted 0.3%, below April's flat reading and contrasting market expectations of a 0.1% increase. On an annual basis, GDP decelerated from the 2.8% increase observed in April to a 2.2% expansion in May. Consequently, the annual average growth rate moderated from 3.5% in April to 3.4% in May. The disappointing May print mainly reflected a contraction in mining, oil and gas extraction, which declined 5.3% over the previous month due to unfavourable weather as well as several maintenance shutdowns at oil fields. On the other hand, within service-providing industries, finance, insurance and real estate services, which account for approximately 20% of GDP, expanded 0.2% in May. Moreover, wholesale trade rebounded from April's 0.7% contraction and advanced 1.0% in May. The Central Bank revised its forecasts in July and projects the economy to grow 2.8%, before decelerating to expand 2.6% in 2012.