Economic activity increased 0.3% in May, after remaining essentially unchanged in April. Significant increases in retail and wholesale trade propelled the growth for the month, while a significant drop in oil and gas exploration dampened it. The strength of the service industries (+0.5%) more than offset the decrease in the production of goods (-0.1%). Gains were also registered in construction, manufacturing, mining excluding oil and gas, and utilities. In addition, the accommodation and food services, and financial sectors moved ahead. On the other hand, declines were recorded in agriculture and forestry.

Retail trade rises sharply

Retail trade jumped 2.5% in May, the largest monthly increase recorded since the 3.0% gain in November 2001. The growth in May followed gains of 0.3% and 1.4% in April and March respectively. The May increase was widespread and largely due to the strength in sales of new cars, used and recreational motor vehicle and parts dealers, building and outdoor home supplies stores, clothing and general merchandise stores (including department stores). Additional momentum came from sporting goods stores and pharmacies.

Wholesale trade advances

Wholesale trade rebounded partially in May (+1.4%), following a strong decline in April (-2.0%). The growth in wholesaling activities was also widespread, with significant increases recorded in sales of motor vehicles, machinery and electronic equipment and other products (which primarily include agricultural products, chemicals, recycled materials and paper products).

Energy sector falls

The energy sector fell 1.1% in May. This setback was due to a decline in natural gas extraction and the continuing plunge in oil and gas exploration (-19.7%). However, petroleum extraction and utilities increased.

For the third month in a row, oil and gas exploration activities recorded a double-digit decrease, reaching a level 40% below their last peak in January. Low natural gas prices have caused exploration companies to significantly reduce their activities. As a result, the number of existing wells being utilized has decreased.

The output of the mining sector, excluding oil and gas, increased 1.5%. The substantial gains realized by the metal ore mines were reduced by the decline in non-metallic mineral mines. The end of labour disputes in metal mines helped this sector to rebound.

Construction moves ahead

The construction sector rose 0.6% in May. The strong showing in non-residential building construction (+2.6%), and in engineering and repair work (+0.4%), overshadowed the 0.1% decline in residential construction. There was particular strength in industrial and commercial buildings, while the construction of single-family homes continued to be the cause of the decline in residential construction. However, the construction of apartments and other multi-unit structures, as well as renovation activities, increased.

The home resale market rose sharply in May. For the second consecutive month, the number of units sold reached an all-time-high. This resulted in a robust 2.4% increase for the real estate agents and brokers industry.

Manufacturing activity advances

The manufacturing sector rose 0.3%. The 1.0% gain in the production of non-durable goods outpaced the 0.3% decline in durable goods manufacturing. Of the 21 major manufacturing groups, 11 increased, these accounting for 54% of total manufacturing value added.

The manufacturing of fabricated metal products, plastics and rubber products, textiles and clothing, beverage and tobacco, and of meat products all posted significant increases. Notable declines were recorded in motor vehicle manufacturing (-2.9%) and associated parts production (-1.2%).

Industrial production (the output of mines, utilities and factories) slipped 0.2% in May. The drop in mining was partially offset by the gains in manufacturing and utilities. In the United States, industrial production decreased 0.1% in May due to the drop in utilities, while mining moved ahead and manufacturing was unchanged.

Other industries

Output in the finance and insurance sector grew 0.3%. This increase was fuelled by a rise in trading on the financial markets in May. The accommodation and food services sector inched forward 0.5% in May, following four consecutive months of declines or no growth. Overnight travel from the United States to Canada was up strongly (+3.6%) for the month. However, the number of overseas visitors to Canada slipped for the period. Air transportation fell 1.2%.