The country’s 2.6 percent expansion in its GDP in the preceding 12 months up to May 2018 was led by growth in Mining, quarrying, and oil and gas extraction, Statistics Canada reported Tuesday.
The Alberta oil sands played a big role in the expansion, as crude bitumen extraction grew by 5.3 percent in May following maintenance shutdowns at some facilities a month earlier. Additionally, 19 of 20 industries showed gains for the month, including the retail sector that gained 2.0 percent in May, recovering from losses in April due to bad weather.
The one industry posting losses were the offices of real estate agents and brokers. This sector was down 2.7 percent in May, in part due to declining home sales in British Columbia. This was the fourth decline since the beginning of 2018.
To show just how much of a role weather plays in the economy of a country, of the 20 sectors followed by Statistics Canada, only one showed a contraction during the month, “and that was utilities, because the weather returned to normal after a horrid April,” Bank of Montreal economist Doug Porter said, reports CBC Canada. “Canadians came out of hibernation in May, and the economy benefited big time.”
“Still, this strong result adds a trace of drama to the upcoming September 5 [Bank of Canada] rate decision, with the Q2 GDP report due the prior week, and memories of last year’s September surprise still fresh,” he said.
Tariffs and trade war still a factor
The Financial Post notes that the Bank of Canada has raised rates four times already this year – and as long as the economy remains tight, more rate increases may be coming.
And the growing trade fight with the U.S. lurks like a dark cloud on the horizon, threatening the North American Free Trade Agreement (NAFTA) and keeping pressure on a number of sectors, including the lumber and uranium industry.
There is some fear this fight between neighbors will have a negative impact on new investments and could end up curbing exports, even though businesses tied to exporting nevertheless posted increases in May. Transportation and warehousing climbed 0.4 percent, while manufacturing was up 0.1 percent.
