Economy grew 0.2% in May, StatCan estimates 2.2% annualized growth in Q2

The Canadian economy continued to keep its head just above water in May, growing 0.2 per cent, led by expansions in manufacturing and the public sector.

Statistics Canada’s gross domestic product report on Wednesday said retail and wholesale trade as well as the oil and gas sector weighed on growth.

However, it highlighted the Trans Mountain pipeline expansion’s contribution to economic growth that month.

“The crude oil and other pipeline transportation industry rose 1.5 per cent, reflecting in part commencement of the expanded Trans Mountain pipeline as the first tankers carrying Western Canadian oil departed from the Port of Vancouver in late May,” the report says.

The federal agency estimates that growth was tempered slightly in June to 0.1 per cent, with growth in construction, real estate and rental and leasing and finance and insurance partially offset by decreases in manufacturing and wholesale trade.

For the second quarter, Statistics Canada expects real gross domestic product grew at an annualized rate of 2.2 per cent.

“Canada’s economy did marginally better than we expected in the closing months of the second quarter, while not registering a medal-winning performance when judged in terms of per capita output gains,” wrote CIBC chief economist Avery Shenfeld.

The latest economic growth figures come one week after the Bank of Canada lowered its key interest rate for a second time in a row.

Governor Tiff Macklem said the central bank’s decision was partly driven by weakening economic conditions.

While the economy has not dipped into a recession, growth has been meagre, particularly when taking population growth into account.

The labour market has also felt the weight of high borrowing costs, with graduates and newcomers particularly affected by dwindling job opportunities.

The unemployment rate has steadily climbed over the last year, reaching 6.4 per cent in June.

The Bank of Canada’s interest rate cuts are expected to take some of the pressure off of the economy, though at 4.5 per cent, its benchmark rate continues to restrict economic growth.