Canada's economy continues to grow
Although the wildfires have severely slowed growth in the oil and gas sector.
Canada's economy grew by 0.3% in May. A significant decline in oil and gas production caused by forest fires was offset by growth in the services sector.
Statistics Canada (StatCan) reported Friday that more than half of all industries in the country posted growth, but the main index didn't grow as much as it could have because of lower numbers in key sectors. The energy sector, which is usually a source of growth for the economy, shrank 2.1% because it was hit by wildfires.
"This was the sector's first decline in five months and its largest since August 2020," the agency said.
Oil and gas production fell 3.6% for the month due to wildfires in Alberta, the largest decline since April 2020.
Another factor constraining economic growth was a 1.8% decline in residential construction. This is also the first decline in the last 5 months, and it was caused by the reduction in the volume of remodeling and repair of housing, as well as the construction of single-detached houses.
The manufacturing and wholesale industries showed growth, as the supply problems that existed earlier have been subsiding lately. The public sector also showed growth, the main reason for which is the end of a long and large-scale strike of workers in this area.
The 0.3% increase that occurred in May was slightly below StatCan's forecast. StatCan had forecasted an increase of 0.4%.
Things are not so rosy with GDP growth. Data for June, which has not yet been fully processed by StatCan, suggests that the May GDP growth was short-lived, and the June figure will already show a decline of 0.2%.
"Economic activity popped higher in May, but a reversal in June suggests that momentum is beginning to falter," commented Desjardins Financial Group economist Royce Mendes on the available data.
Doug Porter — economist at the Bank of Montreal — believes that data released Friday by StatCan, indicate that the Canadian economy will grow by about 1.2% on balance in the second half of the year. That's less than the economic growth projected by the Bank of Canada.
