Economy grew 0.3% in May, on track for solid Q2 rebound: StatCan

OTTAWA — The economy was growing steadily in May and appeared on track for a solid rebound in the second quarter as a whole, Statistics Canada said Friday.

The agency said real gross domestic product rose 0.3 per cent in May amid growth in both the goods and services sides of the economy. That topped StatCan’s own initial estimate for 0.1 per cent growth in the month.

The agency said output from the mining, quarrying, oil and gas extraction sector rose one per cent in May, leading economic growth for a second straight month.

Oilsands extraction was higher as some usual spring maintenance activities were either completed early or deferred. Strength in pipeline shipments helped fuel growth in the wider transportation and warehousing sector in the month, the agency said.

Offices of real estate agents and brokers, meanwhile, saw activity increase 5.1 per cent in May — the subsector’s biggest monthly jump since October 2024. The spring housing market was warming up in May following an extended cold snap, particularly in Ontario and British Columbia, StatCan said.

Construction, manufacturing and the finance and insurance sectors all grew for a second consecutive month and the public sector also expanded in May.

April’s GDP figures, meanwhile, were revised a tenth of a point higher to 0.6 per cent. StatCan’s flash estimate calls for a gain of 0.2 per cent in June amid expected gains in wholesale, retail trade and finance and insurance.

Taken together, StatCan’s advance estimate has real GDP rising 3.4 per cent on an annualized basis in the second quarter, marking a sharp rebound from a mild contraction in the first three months of the year.

If that estimate holds, it would top the Bank of Canada’s forecasts for growth of 2.5 per cent in the second quarter.

The unexpected decline in the first quarter of the year was the second quarterly contraction in a row, sparking some talk of a recession hitting the economy. But TD Bank economist Marc Ercolao said most recent data haven’t shown much evidence of a meaningful downturn.

“It’s increasingly looking like the stalling of growth in the first quarter was more reflective of temporary drags and volatility rather than a meaningful deterioration in underlying activity,” he said in a note to clients Friday.

BMO chief economist Doug Porter said in a note that the small dip in the first three months of the year “overstated the economy’s weakness,” and the truth of Canada’s current output probably lies in the average between the two quarters.

Porter expects growth will moderate in the second half of the year from the second quarter’s robust pace. High fuel costs and U.S. President Donald Trump’s latest tariff threat against Canada should put a chill on growth, he argued.

StatCan will release its official estimates for the second quarter when it reports June GDP figures at the end of August.

The Bank of Canada is scheduled to make its next interest rate decision on Sept. 2, a few days after that release. The central bank held its benchmark interest rate steady at 2.25 per cent earlier this month and has so far been on hold for all of 2026.

Ercolao said the May GDP print does little to change the narrative for the central bank, which TD expects to remain on the sidelines for the rest of the year.

“Growth is proving resilient enough to forego additional rate relief, while contained inflation readings, lingering labour market slack and ongoing trade uncertainty argue against a shift toward a more restrictive stance,” he said.

This report by The Canadian Press was first published July 31, 2026.

Craig Lord, The Canadian Press