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Canadian GDP growth slows in May

Tags: Canadian GDP

Canada’s economy grew by a less-than-expected 0.1 percent in May, weighed down by a decline in manufacturing and construction, Statistics Canada reported on Tuesday.

Economists were expecting growth of 0.2 percent -- lower than the 0.3-percent growth posted in April.

Manufacturing output fell by 0.5 percent in May, led by both a decline in durable and non-durable goods orders.

Construction output was also down -- falling 0.2 percent from the previous month and led by 4.8-percent decline in output from real estate agents and brokers.

Mining and oil and gas extraction led the way higher, posting 0.6-percent growth from the previous month -- but below the 2-percent growth in April.

Output in the finance and insurance sector rose 0.5 percent, led by increases in equity trading and personal lending.

Overall, services industries grew by 0.1 percent in May, while output in goods-producing industries was flat.

Economists now predict that the Canadian economy will grow at a similar or slightly lower pace than the 1.9-percent growth posted in the first quarter.

"Extremes make headlines, but Canada’s economy is a picture of mediocrity," says Avery Shenfeld, chief economist at CIBC. "A 1.5-2.0% range for growth isn’t terrible, all things considered, but it’s a pace that is consistent with no progress in bringing the unemployment rate down."

The weaker than expected monthly GDP figure comes after the Bank of Canada recently lowered its second quarter GDP forecast to 1.8 percent.

“The number actually supports the Bank of Canada’s view that the economy is growing at a trend rate of little below 2 percent at the moment -- if anything it reinforces their perspective,” Craig Alexander, chief economist at TD Bank, tells BNN.

Other data on Tuesday showed producer prices fell 0.3 percent in June from May as cheaper fuel offset price increases for cars. But without the impact of the Canadian dollar's depreciation against the U.S. dollar in the month, the producer price index would have fallen 0.8 percent.

Raw materials prices fell for the fifth straight month in June, down 4.0 percent, mainly due to a sharp fall in crude oil prices.

With files from Reuters CTV Two CTV News CTV News Channel BNN - Business News Network CP24