Canada's economy performed slightly better than expected in May as the Bank of Canada continues to consider further rate cuts this year.
Gross domestic product (GDP) grew by 0.3% in April and another 0.2% in May, according to data released today by Statistics Canada. Meanwhile, the agency expects GDP to grow by 0.1% in June, but this figure may be adjusted.
Statistics Canada forecasts that based on these preliminary estimates, the country's economy will grow by 0.5 per cent in the second quarter, up from 0.4 per cent in the first quarter. Specific economic data will be released on August 30.
Royce Mendes, managing director of the Fondation de Jardin de Jardin, Quebec, noted in today's report that economic growth in the second quarter showed some weakness even on a per capita basis. He said the data was unlikely to prevent the Bank of Canada from cutting interest rates for the third time in a row in September.
Tony Stiro, chief Canada economist at Oxford Economics, noted that although estimates showed a gross domestic product (GDP) growth of 0.5% in the second quarter, there were downside risks. He explained that Statistics Canada's preliminary estimates in five of the last six quarters overestimated quarterly GDP growth rates.
Avery Shenfield, an economist at Capital Markets at the Canada Imperial Bank of Commerce (CIBC), also commented on the latest economic data, saying Canada's economy performed slightly better than expected. "These data may lead to a small upward revision to the Q2 GDP forecast, but this adjustment will not be sufficient to influence the decision to cut interest rates further in September," Shenfield said in a statement.
He added: "Despite the improvement, it is not a podium-level performance and it has not reached the 1.4% monthly GDP growth rate that has been achieved over the past year. ”
The latest gross domestic product (GDP) data released by Statistics Canada has a significant impact on the Bank of Canada's interest rate policy. After a long pause, the central bank has cut interest rates twice in a row in the past three months, and the next interest rate decision will be announced in September.
According to Statistics Canada, the goods-producing sector grew by 0.4% in May, becoming the main driver of overall economic growth. At the same time, growth in the service production sector also improved, with a slight increase of 0.1%.
Overall, 15 of the 20 industries monitored by Statistics Canada saw growth in May. The data will provide a key reference for upcoming central bank decisions.
The wholesale trade sector saw a decline of 0.8 percent in May, following a 1.4 percent increase in April. The decline was mainly due to lower activity in the auto parts and accessories industry, as well as lower imports of passenger cars and light trucks, while production in the automotive and parts manufacturing sector also decreased in May.
Andrew DiCapua, an economist at the Canada Chamber of Commerce, noted in a report that the Canada economy is under pressure from rising interest rates. "Nonetheless, the resilience shown by major sectors has led to Q2 gross domestic product (GDP) estimates exceeding Canada expectations," he added. However, this growth is likely to be heavily influenced by seasonal factors. ”
Overall, the situation is moving in a positive direction, and it seems that everyone can expect good news from the third rate cut.