Key facts
- Canada's economy grew by 0.3% in May, surpassing economists' expectations of 0.2%.
- The mining, quarrying, and oil and gas sector was a key driver of growth, expanding by 1.0%.
- April's economic growth was revised upward to 0.6%.
- The estimated 3.4% annualized growth for the second quarter is the highest since Q1 2023.
- The Bank of Canada forecasts 2.5% growth for the second half of the year.
Canada's economy demonstrated stronger-than-anticipated growth in May, expanding by 0.3%, according to official data released by Statistics Canada. This figure surpassed the 0.2% growth predicted by economists polled by Reuters. The previous month, April, saw its growth revised upward to 0.6% from an initial 0.5% estimate, marking the highest month-on-month gain since July 2025.
Both goods-producing and services-producing industries contributed to the expansion. Goods-producing industries saw a 0.6% increase, while services-producing industries grew by 0.2%. A significant contributor was the mining, quarrying, and oil and gas extraction sector, which expanded by 1.0%, with oil sands extraction rising by 0.7%.
Looking ahead, Statistics Canada provided a flash estimate suggesting that June's GDP likely increased by 0.2%. This projection indicates a robust annualized growth rate of 3.4% for the second quarter, considerably higher than the Bank of Canada's July forecast of 2.5% and the strongest quarterly increase since the first quarter of 2023.
In its July 15 decision, the Bank of Canada maintained its benchmark overnight rate at 2.25%. The bank anticipates that economic growth will strengthen in the latter half of the year, citing easing inflation pressures and businesses' continued adaptation to U.S. tariffs. Money markets are currently pricing in no further rate changes for the remainder of the year.