By: Luke Jones, Published on July 28, 2017 05:40 PM, Last Update on July 30, 2017 02:41 PM
Economic growth in Canada easily exceeded expectations through the month of May. Growth was propelled by the energy sector, furthering the possibility that the Bank of Canada will increase interest rates later in the year.
The economic data was presented by Statistics Canada on Friday. Real gross domestic product grew by 0.6 per cent through May, confounding expectations that had been pegged at 0.2 per cent. The Bank of Canada has already raised the key interest rate this month, the first time it has done so since 2010.
TD Bank senior economist Brian DePratto says economic performance in Canada has been solid across most industries.
“This is only going to strengthen the case for them,” he said of the central bank.
If the Bank of Canada decided to increase interest rate again, it cannot do so until September at the earliest. DePratto says he expects the bank to wait until October before it makes any rate adjustments.
Bank of Montreal head economist, Doug Porter, says the economy has increased 4.6 percent compared to the same time last year:
“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,” Porter wrote in a note to clients.
Porter adds that the latest figures mean Canada is on course for three per cent GDP growth in 2017. This would be above the projected 2% growth estimated for this year.
“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.