July 28, 2023 By The Canadian Press
OTTAWA — The Canadian economy grew by 0.3 per cent in May, Statistics Canada said Friday.
In its latest report on economic growth, the federal agency’s preliminary estimate suggests real gross domestic product grew at an annualized rate of 1 per cent in the second quarter.
The May figure came in slightly lower than was expected by Statistics Canada as mining and oil and gas companies reduced their operations in Alberta at the outset of the record-breaking wildfire season.
The energy sector was down 2.1 per cent in May, the release shows.
“This was the sector’s first decline in five months and its largest since August 2020,” the agency said.
The modest GDP increase in May was driven, in part, by a rebound in the public administration sector as most federal public servants on strike returned to work by the end of April. However, 35,000 Canada Revenue Agency workers remained on strike for three days in May, which dampened the rebound.
That modest growth is unlikely to hold, as the federal agency’s preliminary estimate for June suggests the economy contracted by 0.2 per cent.
The Bank of Canada’s key interest rate is at five per cent, the highest it’s been since 2001. The interest rate spike is expected to slow the economy down, though it has generally performed better than expected this year.
Statistics Canada says the estimated decrease in June is mainly owing to the wholesale trade and manufacturing sectors.
Both sectors saw growth in May as supply chain issues related to semiconductor chips eased, but the downward trend in June is expected to “more than offset the increases recorded in May,” the agency said.
Despite the high interest rates, the real estate sector is expected to continue to grow in June.
In May, home resales in most of Canada’s largest markets led to an industry increase of 7.6 per cent.