| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 0.2% | 0.1% to 0.4% | 0.3% | 0.5% | 0.6% |
| Year over Year | 1.7% | 1.1% |
Highlights
Canada's economy showed more momentum than expected in May, when it expanded 0.3 percent, above the 0.2 percent consensus in an Econoday survey.
The performance was made more evident by an upward revision to April's growth estimate, now at 0.6 percent, up from the 0.5 percent initially reported.
The advance estimate for June points to a further 0.2 percent increase, which would put the second quarter growth at 0.8 percent. In June, wholesale, finance and insurance, and retail trade all increased, while activity in utilities and agriculture, forestry, fishing and hunting contracted, the preliminary estimates show.
The question now is whether this recovery, following two quarters of declines, can be sustained in light of ongoing uncertainty related to U.S. tariffs and the Middle East war. This is one of the questions that came up during conversations among Bank of Canada Governing Council members according to the minutes of the July meeting. While may's reading exceeded expactations, the trend over the quarter has been a slowdown from 0.6 percent in April, 0.3 percent in May and a preliminary 0.2 percent in June.
Overall, growth expanded in 13 of 20 industries in May. Goods-producing industries were up 0.6 percent, down from 1.4 percent in April, and services increased another 0.2 percent.
Within goods-producing industries, gains were widespread across four of five categories, led by a 1.0 percent advance in mining, quarrying, and oil and gas extraction. The oil and gas extraction subsector rose 0.7 percent while mining and quarrying (excluding oil and gas) contracted 0.7 percent. Energy was up 1.1 percent on the month. Construction grew 0.8 percent and manufacturing 0.3 percent, with a 1.0 percent gain in non-durables partly offset by a 0.2 percent decline in durables.
Services benefitted from a 0.6 percent increase in public administration, with growth in the overall public sector up 0.3 percent. Real estate, and rental and leasing was up 0.4 percent in a fourth consecutive monthly increase. Activity in finance and insurance also rose, by 0.3 percent on the month after 0.4 percent in April. The report cited"heightened activities in the equity and bond markets amid the uncertainty associated with the conflict in the Persian Gulf" as banking, monetary authorities and other depository credit intermediation was up 0.2 percent and"other" finance and insurance up 0.4 percent. Transportation was also among upward contributors, with a monthly increase of 0.3 percent, including a 2.7 percent rise in pipeline transportation led by natural gas.
On the downside, wholesale trade declined 0.4 percent and activity in arts, entertainment and recreation contracted 0.3 percent.
Market Consensus Before Announcement
The consensus sees GDP up 0.2 percent on the month in May.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.
Description
Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.