Canada's Economy Roars Back with Strong Q2 Growth

The Canadian economy is showing signs of a strong recovery in Q2, according to recent GDP data. The 0.3% increase in May was stronger than expected, beating both a consensus estimate and a preliminary figure based on April's numbers. In fact, the revised April figure was bumped up to 0.6%, while June's preliminary estimate showed a respectable gain of 0.2%. This suggests a healthy Q2 GDP growth rate of 0.8% or around 3.2% annualized, surpassing a recent 2.5% estimate made by the Bank of Canada.

The gains were led by a 0.6% rise in goods production, with mining, manufacturing, utilities, and construction all showing improvement after a weak start to Q1. Services also saw a second consecutive increase of 0.2%, driven by public administration and accommodation and food services. However, wholesale trade was the main drag, coming in at -0.4%.

The Bank of Canada has increased its confidence in a rebound in Q2 GDP, but there are differing opinions on whether this growth can be sustained. The recent tariff hits have had an impact, but another round could delay the recovery further. Year-over-year growth reached 1.7%, the highest since July 2025.