Canada's Economy Grew 0.8% in Q2, Beating Expectations

Canada's economy showed strong rebound momentum in the second quarter. Data released by Statistics Canada on Friday showed that gross domestic product (GDP) grew 0.8% quarter-over-quarter in Q2, well above the revised 0.1% growth in Q1. On an annualized basis, the economy expanded 3.4% in the quarter, not only reversing the weak start to the year but also significantly surpassing the Bank of Canada's July forecast of 2.5% annualized growth.

**Energy and Goods Production Lead Growth**

By sector, goods production was the core driver of growth. Thanks to higher crude oil and bitumen output in Alberta and the postponement of some maintenance work, the mining, quarrying, and oil and gas extraction industry grew 1.0% month-over-month in May, leading for a second consecutive month. Driven by this, support activities for the resource sector surged 7.3%. Overall, goods production rose 0.6% month-over-month in May, while construction also grew 0.8%, boosted by residential projects.

**Services and Real Estate Perform Steadily**

Services production also maintained growth momentum, rising 0.2% month-over-month in May. Among them, the real estate and rental industry was active due to increased home sales, while finance and insurance also contributed to growth. Statistics Canada's preliminary estimate for June showed GDP was on track to grow another 0.2% month-over-month, laying a solid foundation for the overall rebound in Q2.

**Momentum May Slow in Coming Months**

Despite the strong data, markets remain cautious about the sustainability of growth. According to an analysis by an economist at CIBC, some one-off factors, such as delayed maintenance at oil facilities, may have boosted growth in the quarter. The economist therefore predicts that the pace of growth will slow slightly in the coming months. The economist also noted that policymakers are unlikely to overinterpret the data, as figures are often subject to revisions.