Overview
Preliminary data from Statistics Canada indicate the Canadian economy accelerated sharply in the second quarter, with real gross domestic product expanding at a 3.4% annualized pace. The reading represents a notable operational recovery after a modest contraction earlier in the year.
How the quarterly outcome compares to expectations
The outturn outstrips the Bank of Canada's July projection of 2.5% annualized growth and reduces immediate concerns about a near-term recession that had been raised after a period of trade-induced stagnation.
Monthly industrial momentum
Industrial production showed continued improvement in May, rising 0.3% for the second month in a row. Thirteen of 20 primary sectors recorded expansions during the month, underscoring a broad-based improvement across the industrial complex.
Resource and goods-producing sectors
Energy extraction was the largest contributor to the advance. The combined mining, quarrying and oil and gas sector climbed 1.0% in May, supported by higher crude bitumen output in Alberta. Elevated extraction activity reflected deferred spring maintenance schedules and a 7.3% jump in support services for the resource industry.
Goods-producing industries led the monthly increase overall with a 0.6% rise, while service-producing industries recorded a steadier 0.2% uptick.
Construction, real estate and financials
Construction activity rose 0.8%, buoyed by gains in residential apartment projects. Real estate transaction volume surged 5.1% as resale activity picked up in key markets across Ontario and British Columbia. The financial sector also contributed to growth, expanding 0.3% as elevated equity and bond market activity offset broader global market volatility.
Transport and energy flows
Transportation and warehousing climbed 0.3%, helped by a 2.7% increase in pipeline throughput amid strong natural gas export demand.
Near-term outlook and data calendar
An advance estimate points to continued GDP growth of 0.2% in June on a monthly basis, which would place total second-quarter industrial output growth at approximately 0.8% on an unadjusted basis. Statistics Canada is scheduled to publish its official second-quarter GDP figures and the finalized June output metrics on August 28.
Note: This article is based on preliminary Statistics Canada data and the advance estimate cited above.