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Investing.com -- Canada’s economy edged down for a second consecutive month in May, with real gross domestic product (GDP) declining 0.1%, according to Statistics Canada. The contraction came in line with economists’ expectations, weighed by declines in goods-producing sectors while services remained largely flat.
The mining, quarrying, and oil and gas extraction sector was the primary drag on overall output, falling 1.0% after two prior months of growth. Within this component, oil sands extraction tumbled 3.0%, reflecting maintenance and retooling activity across several Alberta facilities.
Manufacturing rebounded with a 0.7% increase in May following a sharp 1.8% decline in April, buoyed by inventory buildups and broad-based strength in both durable and non-durable goods. Growth was led by fabricated metal product manufacturing, which rose 2.8%, while the machinery manufacturing subsector fell again, posting its fourth decline in five months.
Retail trade pulled back 1.2% in May, dragged lower by motor vehicle and parts dealers, which dropped 4.8%. Food and beverage stores and gasoline stations also saw contractions, offsetting prior gains and emphasizing weak consumer spending.
On a brighter note, transportation and warehousing activity rose 0.6%, driven by a 1.9% surge in rail transportation volumes. Increased intermodal and non-intermodal carloadings followed a sluggish April linked to weaker U.S.-bound freight flows.
Real estate and rental and leasing expanded 0.3% in May, as higher home resales, especially in the Greater Toronto Area, boosted output from real estate agents, brokers, and related services by 3.5%. Legal services also saw a 0.5% uptick, tied to transaction activity.
Preliminary data suggest GDP likely increased by 0.1% in June, helped by recoveries in retail and wholesale trade. However, with May and June data combined, the economy was largely unchanged in the second quarter, flagging potential softness in future momentum.