Canada’s GDP contracts again in May, projected to gain in June

Investing.com -- Canada’s economy edged down for a second consecutive month in May, with real gross domestic product (GDP) declining 0.1%, according to Statistics Canada. The contraction came in line with economists’ expectations, weighed by declines in goods-producing sectors while services remained largely flat.

The mining, quarrying, and oil and gas extraction sector was the primary drag on overall output, falling 1.0% after two prior months of growth. Within this component, oil sands extraction tumbled 3.0%, reflecting maintenance and retooling activity across several Alberta facilities.

Manufacturing rebounded with a 0.7% increase in May following a sharp 1.8% decline in April, buoyed by inventory buildups and broad-based strength in both durable and non-durable goods. Growth was led by fabricated metal product manufacturing, which rose 2.8%, while the machinery manufacturing subsector fell again, posting its fourth decline in five months.

Retail trade pulled back 1.2% in May, dragged lower by motor vehicle and parts dealers, which dropped 4.8%. Food and beverage stores and gasoline stations also saw contractions, offsetting prior gains and emphasizing weak consumer spending.

On a brighter note, transportation and warehousing activity rose 0.6%, driven by a 1.9% surge in rail transportation volumes. Increased intermodal and non-intermodal carloadings followed a sluggish April linked to weaker U.S.-bound freight flows.

Real estate and rental and leasing expanded 0.3% in May, as higher home resales, especially in the Greater Toronto Area, boosted output from real estate agents, brokers, and related services by 3.5%. Legal services also saw a 0.5% uptick, tied to transaction activity.

Preliminary data suggest GDP likely increased by 0.1% in June, helped by recoveries in retail and wholesale trade. However, with May and June data combined, the economy was largely unchanged in the second quarter, flagging potential softness in future momentum.

You May Also Be Interested In

• Canadian dollar slips as trade tensions, Fed outlook keep loonie under pressure
• DraftKings and Flutter Entertainment rise after court ruling on prediction markets
• Canada economy rebounds in second quarter, beating Bank of Canada forecast