Canada’s economy expanded 0.3 percent in May as a large decline in oil and gas production due to the wildfires was offset by growth in the services sector.
Canada Statistics reported on friday that more than half of all industries posted growth, but the headline figure was dragged down by declines in a few key industries. The energy sector, normally a source of strength, contracted 2.1 percent as it was “severely affected” by the wildfires.
“This was the first drop in the sector in five months and the biggest since August 2020,” the agency said.
Oil and gas extraction fell 6.6% during the month as a result of the wildfires in Alberta. That was the largest decline since April 2020. “The fires primarily affected facilities in the western parts of the province, from Edmonton to the foothills of the Rocky Mountains in the Clearwater, Montney and Duvernay formations,” Statistics Canada said.
Residential building construction was another drag on growth, as activity fell 1.8 percent. That was the first decline in five months and was driven by declines in home renovations and improvements, and construction of new single-family homes.
On the bright side of the ledger, the wholesale and manufacturing sectors grew as previous bottlenecks in the supply chain continued to ease.
The public sector also expanded, mainly helped by the end of a large and protracted public sector workers’ strike.
Advanced data for June suggest that GDP growth in May was short-lived, as it is on track for a 0.2 percent contraction next month.
“Economic activity picked up in May, but a reversal in June suggests momentum is starting to falter,” Desjardins economist Royce Mendes said of the figures.