Business

Canada's GDP shrank by 0.6% in May, worst month in more than 7 years

Canada's economy contracted by 0.6 per cent in May, as wildfires in Alberta and a slowdown in manufacturing elsewhere in the country combined to create the worst monthly GDP figure since March 2009.

Economic slowdown is the largest since March 2009, Statistics Canada says

The huge wildfire in Fort McMurray, Alta., in May knocked oilsands output off by 22 per cent for the month. (Terry Reith/CBC)

Canada's economy contracted by 0.6 per cent in May, as wildfires in Alberta and a slowdown in manufacturing elsewhere in the country combined to create the worst monthly GDP figure since March 2009.

Canada's gross domestic product was hit hard by the Fort McMurray fires, as the non-conventional oil and gas extraction sector declined by 22 per cent in May.

Coming on the heels of an 8.1 per cent decrease in April due to maintenance shutdowns at upgrader facilities, the output level for the oilsands is now at its lowest since May 2011.

"The good news is that the fall should prove to be a one-month wonder," BMO economist Doug Porter said.

But other sectors of the economy didn't fare much better.

Manufacturing output was down 2.4 per cent, the largest decline since January 2009.

Utilities declined 1.8 per cent as electric power generation, transmission and distribution were lower, as was the natural gas distribution sector.

Although it wasn't enough to offset large drops in oil and manufacturing, the service sector expanded during the month, led by retail, arts and entertainment, finance and insurance. 

If the impact of the wildfire were to be stripped out, the data agency says, the economy still would have shrank by about 0.1 per cent during the month.

"When we look through the wildfire-generated volatility, the picture that emerges is of an economy that, following a strong December and January, has been just trudging along," TD Bank economist Brian DePratto said.

"While this is not the worst outcome, it does point to an economy that is largely treading water as the adjustment to lower commodity prices continues. 

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