Canada's Economy Surges.
Canada Leads G7 with Strongest Economic Growth as Real Estate and Oil Fuel Rebound.
Anonymous
Key Points
1
Canada posted the fastest growth among the G7, with Shafqat Ali attributing the progress to the leadership of Prime Minister Mark Carney.
2
Offices of real estate agents and brokers rose 5.1% in May, the subsector’s biggest monthly jump since October 2024.
3
Oil sands production contributed to the rebound, with May crude production volume the highest for that month since at least 2016 and Western oil sands output up 12.4% year over year.
4
Bank of Canada’s July monetary policy report projected Q2 growth at about 2.5% based on expenditure measures.
5
The Canadian dollar weakened after the data release, slipping to as low as 1.4050 per US dollar as bonds sold off on the session.
Canada's economy grew 0.3% in May, beating expectations and putting the country on track for its strongest quarter in years, according to Statistics Canada. The gain pushes second-quarter annualized growth above 3%, making Canada the fastest-growing economy in the G7.
An early estimate for June shows a further 0.2% gain, according to The Globe and Mail. That would put annualized Q2 growth at roughly 3.4% — well above what most economists predicted just months ago.
Oil Sands and Real Estate Power May's Broad Gains
The May rebound was driven by two key sectors: energy and real estate. Oil sands production hit its highest level for any May since at least 2016, according to Investing.com. Western oil sands output rose 12.4% compared to a year earlier. That kind of surge gave the whole economy a significant lift.
Real estate also bounced back sharply. Offices of real estate agents and brokers rose 5.1% in May — the biggest monthly jump for that sector since October 2024, according to The Globe and Mail. Economists called the overall gains "broad-based," meaning growth was spread across many parts of the economy, not just one or two industries.
Canada Tops G7 Growth Chart as Recession Fears Fade
Canada is now posting the fastest growth among G7 nations, a group that includes the US, Germany, Japan, and four other major economies. Just months ago, many analysts feared Canada was heading into a recession. Tariff pressures and weak consumer spending had weighed heavily on growth in early 2025.
Shafqat Ali credited the turnaround to leadership, pointing to Prime Minister Mark Carney's role in stabilizing the economy, according to Traders Union. The Bank of Canada had projected Q2 growth at about 2.5% in its July monetary policy report. The actual pace now looks set to beat that by nearly a full percentage point.
Temporary Boosts Also Helped Push the Numbers Higher
Not all of May's gains came from lasting drivers. Economists noted that temporary factors also played a role. Census hiring added workers to the payroll count. World Cup-related spending boosted demand in hospitality and retail. These one-time lifts helped push the monthly number higher, Newsy Today reported.
That means some of the momentum may fade in coming months. Still, the underlying trend looks solid. The economy has now grown in back-to-back months, and early June data suggests the expansion is continuing, according to Head Topics.
Canadian Dollar Slips Even as Growth Data Impresses
Despite the strong growth numbers, the Canadian dollar actually fell after the data came out. The loonie slipped to as low as 1.4050 per US dollar as bond prices dropped. That may seem odd — good economic news usually lifts a currency. But traders may have sold on the news after pricing in the gains in advance.
The Bank of Canada will likely weigh the strong Q2 data carefully at its next meeting. If growth holds near 3.4%, pressure to cut interest rates could ease. The central bank had already signaled caution, and these numbers give it more reason to hold steady, according to The Globe and Mail.
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