Economy blows past expectations in May

OTTAWA — Economic growth in the country blew past expectations in May, powered by the energy sector, posting the fastest expansion on an annual basis since October 2000 and raising expectations the Bank of Canada will raise interest rates again this fall.

Statistics Canada said Friday that real gross domestic product grew by 0.6 per cent for the month. Economists had expected an increase of 0.2 per cent, according to Thomson Reuters.

The Bank of Canada raised its key interest rate earlier this month for the first time since 2010. The central bank’s target for the overnight rate sits at 0.75 per cent.

TD Bank senior economist Brian DePratto said the economic performance was healthy across nearly every industry.

“This is only going to strengthen the case for them,” he said of the central bank.

The Canadian dollar, which has been gaining ground since the middle of last month when speculation of a central bank rate hike started, was trading at 80.52 cents US, up from an average price of 79.87 cents US on Thursday.

The Bank of Canada’s next opportunity to raise its key rate is in September, but DePratto suggested it would wait until its October rate announcement when it will also update its economic forecasts in its monetary policy report.

Compared with a year ago, the economy soared 4.6 per cent. The result was the best since October 2000 when the economy posted year-over-year growth of 4.7 per cent.

“While that very impressive headline comes with a caveat — last May was depressed by the Alberta wildfires — even excluding that factor leaves the underlying growth trend well above three per cent,” Bank of Montreal chief economist Doug Porter wrote in a note to clients.

He said the latest report puts Canada on track for roughly three per cent GDP growth this year, more than a percentage point above where consensus expectations were just six months ago.

“While the blow-out headline advance no doubt exaggerates the underlying strength in growth, the fact is that every single major surprise for the economy this year has been to the upside,” Porter said.

Statistics Canada said goods-producing industries rose 1.6 per cent, driven by a 4.6 per cent increase in the mining, quarrying, and oil and gas extraction sector.

The oil and gas extraction subsector grew 7.6 per cent, with non-conventional oil extraction rising 13 per cent due to a rebound in activity after a fire at the Syncrude Mildred Lake upgrader in mid-March that curtailed production. Conventional oil and gas extraction gained 3.2 per cent.

Service-producing industries increased 0.2 per cent, led by finance and insurance services.

Just Posted

WATCH: Finishing touches being put on Servus Arena

The finishing touches are being put on Red Deer’s newest arena. The… Continue reading

Suspect in police chase in court

RCMP opened fire twice while trying to arrest suspects in vehicle chase in October

New temporary beds will immediately help Red Deer homeless

The 20 new temporary beds approved for Safe Harbour’s warming centre cannot… Continue reading

Red Deer RCMP are seeking man posing as a police officer

Suspect is large, in his 30s, with red hair and beard

Update: “Someone knows something” – police

Motorist dies near Ponoka after loose tire collides with vehicle near Ponoka

Red Deer police seize rifles and shotguns from storage locker

A man and a woman facing nearly 200 charges after 29 firearms seized last month

Notley criticizes MLA who fired staffer after sex harassment complaint

Notley says if Jason Nixon was her house leader he’d be out of a job immediately.

Red Deer needs to find a solution to syringe debris: city manager

City will consider the problem during the 2018 operating budget talks

WestJet Christmas video turns children’s wishes into reality

This year’s annual video took a new spin on the 12 days of Christmas

VIDEO: Replay Red Deer Dec. 10

Watch news highlights from Red Deer and Central Alberta

VIDEO: B.C. to end geographic area rent increases, close fixed-term lease loopholes

Both clauses allowed landlords to raise rents above the max annual allowable rent increase

UPDATE: Train hits hydro pole, causes outage near Deltaport

No injuries reported but traffic in and out of Deltaport is blocked

A Red Deer daycare coordinator wins provincial award of excellence

Nicole Morrell is a coordinator at Johnstone Daycare

Holiday shopping season picking up in Red Deer

With 18 shopping days left until Christmas, Red Deer businesses are cautiously… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month