Canada's economy grew by 0.3% in May, in line with expectations, as demand for services outpaced slower growth in the energy sector, according to Statistics Canada data released on Friday.
Analysts polled by Reuters had forecast a 0.3% increase in May. April GDP was updated to 0.1% growth from an earlier report that showed no growth. However, GDP value is expected to decrease by 0.2% in June, showing an annual growth rate of 1% in the second quarter, based on Statistics Canada's flash estimate.
The Bank of Canada has forecast annual GDP growth of 1.5% in the quarter ending in June. The central bank said in early July that demand for services and a tightening in the labor sector were among the factors driving the economy, as it raised its GDP growth forecast for this year.
A recovery in the wholesale and public administration sectors, as well as increases in the manufacturing and real estate sectors, helped drive economic growth in May, according to a statement from Statistics Canada. The manufacturing sector posted its biggest increase since October 2021, with both durable and non-durable goods manufacturing increasing.
The increase helped outpace the largest decline in the energy sector since August 2020. Canada's energy sector has been seriously affected by wildfires in the province of Alberta, which is a major oil-producing region.
Oil and gas extraction, excluding oil cluster areas, decreased by 6.6% due to wildfires in Alberta, according to Statistics Canada. Overall, Canada's services sector expanded by 0.5% in May, while the goods-producing sector contracted by 0.3%.
