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Real GDP increased in May

Canadian Economics

By: Viktor Cicman

    

Real gross domestic product (GDP) increased by 0.3 per cent in May, following a 0.6 per cent rise in April, as both goods-producing and services-producing industries expanded in the month.

  • Good-producing industries posted the largest relative increase for the month, expanding by 0.6 per cent. Meanwhile, services-producing industries rose 0.2 per cent, driven in large part by increases in real estate and rental and leasing and public administration.
  • Mining, quarrying, and oil and gas extraction saw the largest gains in the goods-producing industries, expanding by 1.0 per cent in May. Support activities for mining, and oil and gas extraction rose 7.3 per cent in May, recording the seventh consecutive monthly expansion and the largest since March 2024. The oil sands extraction industry (1.6 per cent) continued to grow, up for a second month in a row, led by higher crude bitumen extraction in Alberta.
  • The manufacturing sector grew by 0.3 per cent in May, its second consecutive increase. After three consecutive monthly declines, chemical manufacturing rebounded by 5.9 per cent in May, making the largest contribution to overall growth within the sector. The increase was driven primarily by a 9.4 per cent rise in pharmaceutical and medicine manufacturing, which coincided with higher exports of pharmaceutical and medicinal products.
  • · Real estate and rental and leasing expanded by 0.4 per cent in May, its fourth consecutive increase. Offices of real estate agents and brokers and activities related to real estate (5.1 per cent) led growth for the sector a second consecutive month. The increase marked the subsector’s strongest monthly gain since October 2024 and reflected higher home resale activity across Canada, particularly in Ontario and British Columbia.
  • Transportation and warehousing increased by 0.3 per cent in May. Pipeline transportation led the increase in the sector as a 3.8 per cent increase in the pipeline transportation of natural gas coincided with higher exports of the product. Crude oil and other pipeline transportation further added to the growth, rising by 1.5 per cent.

Key insights

With today’s release of GDP estimates, Canada’s economy appears to have regained footing in the second quarter following a weak first quarter. Real GDP rose by 0.3 per cent in May, supported by the mining, oil and gas sector, construction, and real estate and rental and leasing. Advance estimates suggest economic activity continued to expand through June, putting the economy on track to return to growth in the second quarter, at a healthy pace of 3.4 per cent. While the rebound is encouraging, there are still many headwinds facing Canada’s economy.

The outlook continues to face important challenges. Trade negotiations remain ongoing, and the possibility of additional tariffs continues to weigh on business sentiment. Geopolitical tensions stemming from the escalating conflict between Iran and the United States have also contributed to higher energy prices, raising concerns that cost pressures could become more broadly felt across the economy. Domestically, population growth has turned negative. Labour market conditions have been modest overall in 2026, with stronger employment gains in May and June helping to offset weaker readings earlier in the year.

Despite these headwinds, several factors are supporting economic activity. Consumer spending has remained resilient, providing an important source of stability in the first quarter. Notably, GDP per capita has returned to growth, reflecting an improvement in underlying economic momentum beyond headline GDP figures. Higher global energy prices have also provided support to the energy sector, with oil and gas exports continuing to increase. In addition, Signal49’s Index of Business Confidence rose in the second quarter, surpassing 80 for the first time in three years. Taken together, these developments point to improving momentum, though elevated uncertainty continues to cloud the outlook for the second half of the year.

To learn more about Canada’s economic outlooks for the long-term or the next five year’s, please visit The Conference Board of Canada’s Canadian Outlook.

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