Canada's Economy Surprises with Strong May Growth
Canada's economy showed a surprise jump in May, expanding 0.3% and beating Statistics Canada's advance estimate of 0.1%. This growth marks a second consecutive month of expansion for the country's GDP and puts it on track to outpace the Bank of Canada's projections of 2.5% annualized growth for the second quarter.
The May result, combined with a June flash estimate of 0.2%, gives an annualized second-quarter growth rate of 3.4%. This is significantly higher than the central bank's projection and has raised questions about the Bank of Canada's upcoming interest rate decision in September.
Real estate saw significant gains in May, with offices of real estate agents and brokers rising by 5.1%, the subsector's largest monthly jump since October 2024. The spring housing market in Ontario and British Columbia showed renewed signs of life, contributing to the growth.
Economists are cautioning against reading too much into a single month's data, but the strong growth has added uncertainty to the rate outlook. Robert Kavcic, senior economist at BMO Economics, noted that US tariff threats set to take effect August 19 have added fresh uncertainty to the situation.