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Economic activity continued its seesaw pattern of recent months as real gross domestic product edged down 0.1% in May after rising 0.4% in April. There was a significant decrease in the energy sector in May. Declines were also recorded in finance, forestry, construction and wholesale trade. Conversely, manufacturing, retail trade and the public sector advanced.

Energy sector output falls

The energy sector output fell 0.9% in May. Natural gas extraction dropped, but crude oi extraction rose moderately.

The weakness in oil and gas output since the middle of 2007 has been attributable to a decrease in the production of natural gas and, to a lesser extent, to a reduced production of crude petroleum. High levels of natural gas inventories in Canada led producers to lower their output, while production difficulties affected oil extraction on several occasions.

Beginning in January 2008, natural gas inventories started to return to more normal levels while exports of natural gas and crude petroleum lost momentum.

Contract drilling was down in May mainly as a result of the unusually wet weather which prolonged the spring ice break-up by two weeks. Moreover, electricity generation fell 1.5%, as a larger portion of the demand was satisfied through imports.

The output of the mining sector excluding oil and gas fell 1.4% in May. Non-metal mines (which include diamonds and potash) recorded a significant drop, while the metal ore mines moved ahead slightly.

The finance and insurance sector drops

The finance and insurance sector retreated as a result of a reduced level of activity in banking services and on the financial markets, while the issuance of new Canadian stocks and bonds was strong.

Construction activity decreases

The construction sector fell for a third consecutive month, down 0.4% in May. All three components (residential buildings, non-residential buildings, and engineering and repair work) declined.

The increases in apartment and row house construction were not enough to offset the declines in single-family and semi-detached homes construction and in alterations and improvements work. In the non-residential sector, the drop in industrial building construction was only partially offset by the increases in commercial and public buildings.

Activities of real estate agents and brokers declined for a sixth consecutive month, due to lower sales of existing homes in most provinces.

Wholesale trade retreats

Value added in wholesale trade edged down 0.3% in May. Notable declines were recorded in the volume of wholesaling of building materials and automotive products. Wholesaling of petroleum products also dropped. However, significant increases were posted in home and personal products, and other products (which primarily include agricultural, chemical, recycled material and paper products).

Manufacturing activity up slightly

Manufacturing production rose 0.1% in May, on the heels of a partial rebound in April. The gain in non-durable manufacturing slightly outpaced the decline in durable manufacturing. Printing and related support activities, and computer and electronic product manufacturing, made significant advances. Manufacturing of machinery equipment for mining and oil and gas extraction posted a third consecutive monthly increase. Conversely, motor vehicle and associated parts production fell by 3.6%, following an April increase. Manufacturing of clothing, and of plastics and rubber products continued to fall.

Manufacturing of petroleum and coal products increased significantly for a second consecutive month, returning to a more normal level of production, following the completion of maintenance and repairs by some refineries in April.

Retail trade advances

Value added in the retail trade sector grew 0.1% in May. There were notable increases in the volume of activities at new and used cars dealers as well as in home centres and hardware stores. In contrast, the volume of sales by food and beverage stores was down.

Other industries

The accommodation services industry retreated by 0.3% in May. The decline in the number of overnight travellers from the United States was the primary cause behind the decrease.

The forestry industry posted a 6.2% decline for the month. This industry continues to suffer from weak U.S. demand and a strong Canadian dollar.