Canada’s economy shrank by 0.2% in May

Economic data released by Statistics Canada point to the nation’s economy heading squarely toward a contraction for a second straight quarter.

The consensus of economists was for a flat reading for gross domestic product in May, following a 0.1-per-cent decline the previous month.

The total value of Canada’s economy declined by 0.2 per cent in May, the fifth consecutive monthly slide, according to Statistics Canada.

The manufacturing, mining, quarrying, oil and gas and utilities sectors were all down.

The federal agency reported Friday that the decline in May was mostly a result of contractions in manufacturing, mining, quarrying, and oil and gas extraction as well as wholesale trade.

Porter said he expects the ongoing declines throughout Canada to end in June due to an improving U.S. economy, stronger auto production and fiscal stimulus.

“The weakness has been largely associated with the sharp drop in oil prices that took place during the second half of 2014 and into 2015”, TD economist Randall Bartlett said in a note to investors.

There was little positive news from May figures though, as the output of goods-producing industries fell 0.6 per cent, notching their fifth consecutive decline.

The construction sector, which has swung between gains and losses, increased one per cent during the month.

Statistics Canada said manufacturing output contracted 1.7% in May after posting no growth in April.

The Canadian economy is estimated to have shrunk by an annualized 0.6 percent in the first quarter because of the oil price crash.

“I’m not going to engage in a debate about what we call this”, Poloz said earlier this month after the central bank predicted the economy contracted an a 0.5 per cent annual pace in the second quarter.

Estimates for economic growth this year have been slashed and now stand below the levels forecast when Ottawa tabled its budget in the spring.