Canada GDP Surges 0.6% in May on Energy, Manufacturing

Design Pics  Corey Hochachka

Design Pics Corey Hochachka

While there are limitations on how much the actions of the federal government influence the overall economy, if the numbers were bad they'd be taking the blame, so expect the Trudeau Liberals to crow about these.

Canada's real gross domestic product (GDP) grew 0.6% in May, as 14 of 20 industrial sectors increased.

But even with that caveat, Porter and other economic forecasters now predict Canada's real GDP growth will be about 3% in 2017, a full point higher than the expectation at the start of this year.

Service-producing industries increased 0.2 per cent, led by finance and insurance services.

The highlight of the May GDP report was a 7.6-per-cent surge in oil and gas extraction.

"There appears to be no holding back the Canadian economy". Real estate and rental leasing fell 0.2 percent in May after five previous gains, and activity of real estate agents fell 6.3 percent.

The Canadian dollar surged against its USA counterpart in the aftermath of the release; by mid-morning, the currency was trading at 80.49 cents (U.S.), up 0.83 cent.

Construction faced a slump of 0.6%.

"If the correction in Canadian housing continues and becomes more severe, it could have knock-on effects to household wealth, industrial activity, and employment", warned Bill Adams, senior worldwide economist at PNC Financial, in a client note Friday morning.

"There appears to be no holding back the Canadian economy, at least for now", TD Bank senior economist Brian DePratto wrote in a client note.

"While the blow-out headline advance no doubt exaggerates the underlying strength in growth, the fact is that every single major surprise for the economy this year has been to the upside", Bank of Montreal's Mr.

DePratto suggested the rapid pace of growth will mean the Bank of Canada will raise interest rates again this fall.

The GDP growth in May is the seventh consecutive monthly gain.

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