Canada’s economy expanded by 0.3% in May, marking the second consecutive month of growth and indicating a strong second quarter, as reported by Statistics Canada. This growth exceeded the agency’s initial projection of 0.1% for the month.

Thirteen out of twenty industrial sectors, including construction, manufacturing, finance, insurance, and the public sector, contributed to the overall gains in May. The mining, quarrying, oil, and gas extraction sector saw a 1% increase, driving growth for the second month in a row due to early or deferred maintenance work, allowing for increased extraction activities.

The transportation and warehousing sector also saw growth, with pipelines facilitating the export of more natural gas, boosting the sector. Real estate agents were particularly active, leading to increased home sales and a surge in the real estate and rental and leasing sector.

An early estimate for June suggests a 0.2% expansion, further solidifying the economy’s growth trajectory. Statistics Canada also revised April’s GDP growth slightly upward to 0.6%, positioning the Canadian economy for a robust second quarter.

The agency’s preliminary estimate indicates a 3.4% increase in real GDP on an annualized basis for the second quarter, rebounding sharply from a slight contraction in the first quarter of the year. This turnaround dispels concerns of a technical recession that arose after two consecutive quarters of GDP decline.

Chief economist Doug Porter from BMO noted that the earlier fears of a recession were exaggerated, emphasizing that the economy continues to move forward steadily. However, economist Andrew Grantham from CIBC cautioned against reading too much into the quarterly figures, citing potential revisions and temporary factors such as oil maintenance schedules and the positive impact of events like the FIFA World Cup.

Grantham anticipates a slower growth pace in the upcoming months, projecting that the Bank of Canada will maintain interest rates at current levels for the remainder of the year as economic slack diminishes gradually.