Canadian economic output rises higher in May

Canada’s economic output rose higher in May. On a sequential basis, Canadian economy grew 0.5 percent. The rise was widespread, as 19 out of 20 major industries grew on the month. The goods-producing industries led the way, rising 0.6 percent. The conclusion of some shut-downs in the oil and gas sector aided in driving a 1.8 percent rise, while construction rose 0.7 percent, recovering after two months of softness. Utilities output dropped 2.4 percent as weather improved.

Services also performed well. Retail trade saw marked strength, rising 2 percent, while wholesale trade and professional services rose 1.4 percent and 0.5 percent, respectively. Markedly, even beyond these major contributors, all major service industries recorded rise in output.

The strong May data send the second quarter growth tracking slightly higher to 3.1 percent, slightly above the initial expectations and a welcome re-acceleration after a weak beginning to the year, stated TD Economics in a research report. However, this pace is unlikely to be sustained. As the rebound from one-off shocks sent activity higher, further negative shocks would help swing the pendulum back in the other direction.

“Production outages in the energy sector and potential tariff impacts should act as headwinds to growth in the coming months, holding the pace of growth to a more sustainable 1.5% to 2% range over the latter part of the year and into 2019, noted TD Economics. 

At 14:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 45.7933, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 15.0364. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex