GDP figures an expected plus
Canadians would probably welcome a little good news these days on the economic front as layoffs mount, prices rise, markets weaken and housing sales slump, and they may well get it when Statistics Canada releases the May gross domestic product numbers tomorrow.
Real GDP is thought to have grown by 0.2 per cent in May, a tepid result to be sure and one that pales by comparison with April's surprisingly good 0.4 per cent, but at least it is in the plus column. Moreover, it is expected to set the stage for a positive reading for the second quarter, unlike the first quarter, which descended into negative territory, and that suggests the country will be able to stave off the dreaded R-word - as in recession.
A recession is defined as two consecutive quarters of negative growth.
In the first quarter, the economy contracted 0.3 per cent on an annualized rate, the first quarterly decline since the second quarter of 2003, as inventories dropped significantly and nasty winter weather battered many regions of the country.
"May was one of those highly unusual months where almost every single major economic indicator pointed in the same direction - slightly higher," Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said in a report. Retail sales, wholesale trade and manufacturing shipments all posted small gains in volume terms. So, too, did housing starts, employment and exports.
"Thus, even as consumer confidence began falling fast in the face of soaring energy prices in May, it appears that the economy managed to churn out a gain in line with its medium-term trend," he said.
He expects that the second quarter as a whole will show an annualized increase of just under 1 per cent.
The May GDP report is not likely to have much, if any, impact on the Canadian equity market, which has been weakening of late, pulled down by softening commodity prices, particularly for crude oil.
Crude closed down $2.54 at $122.19 on the New York Mercantile Exchange yesterday. Just 12 sessions ago, it was as high as $147.27 (U.S.) a barrel.
