Economy hit ‘sharp reversal’ in June. What this means for the Bank of Canada
Canada’s economy kept growing in May, but early signs of a long-awaited slowdown started to appear in June, according to Statistics Canada.
The federal agency said Friday that real gross domestic product was up 0.3 per cent in May, with growth in services-producing sectors offsetting declines in goods.
A return to work among striking federal service workers helped lift GDP in May, StatCan said. An easing in supply chain kinks, especially among semiconductors, boosted automotive manufacturing in the month.
Rebounding housing markets in some of Canada’s largest cities drove real estate activity up 7.6 per cent, StatCan said. Construction activity contracted 0.8 per cent, however, amid a slowdown in residential building and renovations.
Forest fires in Alberta dragged down growth in the mining, quarrying and oil and gas extraction industries in May, according to the agency.
The energy sector was “severely impacted” by forest fires, StatCan said, contracting 2.1 per cent in May — the largest decline in the industry since August 2020.
The month’s GDP figures are down slightly from StatCan’s flash estimates suggesting growth of 0.4 per cent in the month. April’s reading showed the economy was virtually unchanged, while it grew a slight 0.1 per cent in March.
Early readings for June show the economy contracted 0.2 per cent in June, though those figures could be revised.
Those same early estimates from StatCan show economy grew at a rate of 1.0 per cent annualized in the second quarter of the year. In its most recent monetary policy report released in July, the Bank of Canada said it expected growth of 1.5 per cent, revised up from earlier expectations of 1.0 per cent.
The central bank has been working to slow the economy by
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