Canada GDP Essentially Unchanged in May

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By Robb M. Stewart

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OTTAWA–Canadian economic output was steady in May from the previous month, as growth in services-producing industries was offset by a decline in goods-producing industries.

Early estimates point to the economy picking up modestly in June.

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The country’s gross domestic product, a broad measure of the goods and services produced across the economy, was unchanged month-over-month in May at 2.054 trillion Canadian dollars, the equivalent of $1.605 trillion, Statistics Canada said Friday. The monthly outcome beat market expectations for a decline of 0.2%, according to economists at TD Securities.

The data agency said early indicators suggest GDP in June increased 0.1% month-over-month.

Write to Robb M. Stewart at [email protected]

By Robb M. Stewart

OTTAWA–Canadian economic output was steady in May from the previous month, as growth in services-producing industries was offset by a decline in goods-producing industries.

Early estimates point to the economy picking up modestly in June, suggesting the economy strengthened in the second quarter.

The country’s gross domestic product, a broad measure of the goods and services produced across the economy, was unchanged month-over-month in May at 2.054 trillion Canadian dollars, the equivalent of $1.605 trillion, Statistics Canada said Friday. GDP expanded 0.3% in April. The result for May beat market expectations for a decline of 0.2%, according to economists at TD Securities.

The data agency said early indicators suggest GDP in June increased 0.1%. Statistics Canada said advance information suggests output was up in the construction, manufacturing and accommodation and food services sectors, countering declines in sectors including mining, oil and gas extraction and finance and insurance in June.

Based on June’s estimate, economists at Statistics Canada forecast GDP rose at an annualized 4.6% in the second quarter, picking up pace from the first three months of the year.

Canada has outperformed relative to the US, which saw its economy fall at an inflation and seasonally adjusted annual rate of 0.9% in the second quarter, a second quarterly contraction in a row, as businesses trimmed inventories, the housing market was hit by rising interest rates and high inflation dented consumer spending. The latest report from the US Commerce Department indicated the economy met a commonly used definition of recession–two straight quarters of declining economic output.

The Bank of Canada in its latest monetary policy report released earlier this month scaled back projections for the domestic economy, which it said is overheated, with tight labor markets and consumer inflation at a 40-year high. It said it expects that with global growth moderating and higher interest rates dampening domestic spending, growth in Canada will slow from an anticipated 3.5% this year to 1.75% in 2023 and 2.5% in 2024. Following several strong quarters, it estimates GDP growth will slow from about 4% in the second quarter to 2% in the third.

Canada’s central bank, which has a mandate to set policy to achieve and maintain 2% inflation, this month surprised markets with a full-percentage-point increase to its policy rate, lifting the target for the overnight rate to 2.5% in the biggest single hike since 1998. That followed increases of a half-percentage point in April and June.

Inflation in Canada accelerated in June, with prices rising at their fastest pace since January 1983. The annual inflation rate hit 8.1% for the month, after a gain of 7.7% in May, driven by surging prices at the gas pump. The Bank of Canada has said it expects headline inflation to be about 8% for the next few months.

Statistics Canada’s GDP report showed that the transportation and warehousing sector rose 1.9% in May from the month before, the first time since the data agency began publishing the statistics in 1997 that the sector increased at such a rate or higher for four consecutive months. The monthly advance was driven a rise in riders on urban transit systems as many workers continued returning to in-person work, as well higher rail movement of forestry products, metals and minerals and grains.

The wholesale trade sector rose 2.7% in May, a fourth monthly increase in a row, with food product wholesaling activity and an increase in farm, lawn and garden machinery and equipment wholesaling helping lift output.

Durable goods manufacturing dropped 1.7% month-over-month in May, the first decline since last September, in part as the ongoing semi-conductor chip shortage crimped output of motor vehicles and motor-vehicle parts. The construction sector contracted for a second month running, falling 1.6% in May, and mining, quarrying and oil and gas extraction slipped 0.1% in May after growth for three consecutive months.

Data covering second-quarter GDP is scheduled for release on July 29. Canadian economic activity cooled in the first quarter as a decline in trade volumes offset robust advances in household purchases, residential real estate and business investment, with GDP increasing at a 3.1% annualized rate for the quarter after 6.6% annualized growth the quarter before.

Write to Robb M. Stewart at [email protected]

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Credit: www.marketwatch.com /

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