{"id":645,"date":"2025-07-31T15:01:06","date_gmt":"2025-07-31T15:01:06","guid":{"rendered":"https:\/\/www.worldpumpnews.com\/?p=645"},"modified":"2025-07-31T15:01:06","modified_gmt":"2025-07-31T15:01:06","slug":"canadas-economy-treading-water-after-gdp-dropped-for-2nd-straight-month-national","status":"publish","type":"post","link":"https:\/\/www.worldpumpnews.com\/?p=645","title":{"rendered":"Canada\u2019s economy \u2018treading water\u2019 after GDP dropped for 2nd straight month – National"},"content":{"rendered":"

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Canada\u2019s economy shrank in May for the second straight month as the trade war with the United States continues to change some financial priorities for businesses and consumers alike.<\/p>\n

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This is because U.S. President Donald Trump\u2019s tariff policies are starting to slowly increase some costs for businesses, which can potentially mean higher prices for consumers if those costs are passed along. However, the economy seems relatively stable for now, according to the latest economic data.<\/p>\n

\u201cCanada\u2019s economy is treading water, neither sinking nor challenging Canada\u2019s world gold medal swimming superstar Summer McIntosh,\u201d says Derek Holt, vice-president and head of capital markets economics at the Bank of Nova Scotia.<\/p>\n

Statistics Canada reported on Thursday that gross domestic product (GDP) for the month of May showed a 0.1 per cent decline compared with the previous month \u2014 the same amount seen in April compared with March.<\/p>\n

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Most economists expected a larger drop of 0.2 per cent for the May report.<\/p>\n

GDP is the total value of goods produced and services provided in a country, and the figure is updated monthly, quarterly and annually. Most experts consider a period of two consecutive quarters, which covers a period of six months, of GDP decline as meeting the criteria for an economic recession.<\/p>\n

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\u201cThe economy continued to grapple with external headwinds; however, most of the May GDP decline was explained by temporary disruptions to oil extraction due to wildfires, with the manufacturing sector partially retracing a large April decline,\u201d economist Abbey Xu at Royal Bank of Canada says.<\/p>\n

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\u201cThe Canadian economic outlook remains highly contingent on the evolution of U.S. trade policy.\u201d<\/p>\n

Prime Minister Mark Carney has been looking to solidify a trade deal with Trump by Aug. 1, but so far, no agreement has been reached.<\/p>\n

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The sectors with the biggest declines in May included mining and quarrying, excluding oil and gas extraction, with a drop of 2.1 per cent.<\/p>\n

Retail trade also contributed significantly to the overall GDP decline, with a drop of 1.2 per cent, and the subsector that contributed most to the drop was motor vehicles and parts dealers.<\/p>\n

Statistics Canada notes that the drop in sales of motor vehicles and parts in May followed an increase in sales for the previous two months. The agency also highlights that sales of motor vehicles and parts in May 2025 were still 7.8 per cent higher than in June 2024.<\/p>\n

Helping to offset some of the GDP declines in May, the sector with the most activity was manufacturing, which grew by 0.7 per cent following a drop of 1.8 per cent in April. Transportation and warehousing increased 0.6 per cent in May, coming off a 0.1 per cent decline in April, and led by rail transportation.<\/p>\n