Canada’s GDP shrank 0.2% in May — the fifth straight month the economy has contracted.
The poor economic data released Friday (July 31) by Statistics Canada is igniting concerns among economists that the country’s economic slowdown isn’t contained just to the recent crash in oil prices.
“The weakness has been largely associated with the sharp drop in oil prices that took place during the second half of 2014 and into 2015,” TD economist Randall Bartlett said in a note to investors.
“However, looking at the monthly GDP by industry data suggests that the weakness is more widespread.”
Statistics Canada reported manufacturing output fell 1.7%, while mining and quarrying contracted 0.8%, and oil and gas production dropped 1%.
"There is no sugar-coating this one — it’s a sour result," BMO chief economist Douglas Porter wrote in an investors’ note.
“Analysts continue to underestimate the ongoing drag from the oil price shock. But while the mining and oil & gas sector was weak, the troubling aspect of this release was the breadth of the drop in output.”
On the upside, the retail sector grew 0.5%, construction was up 1% and output from real estate agents and brokers is up 2.1%.
The latter two sectors are of particular importance to B.C.
Separate reports from BMO, the Conference Board of Canada and Central 1 Credit Union have forecast B.C. will lead all provinces in GDP growth this year and next, thanks largely to the strength of Metro Vancouver’s real estate market.
Economists predict B.C.’s economy will grow between 2.5% and 3.1% this year before dipping slightly in 2016.
Porter said he expects the ongoing declines throughout Canada to end in June due to an improving U.S. economy, stronger auto production and fiscal stimulus.
