Canada Economy Shrank 0.5% in May

Canada’s economy contracted for a 10th month in May because of falling manufacturing output, and declines in the mining and energy industries., Bloomberg 7/31/2009 9:27:44 AM

Gross domestic product declined 0.5 percent during the month. The economy shrank 0.2 percent in April, Statistics Canada also said, revising its original estimate of a 0.1 percent decline.

The economy fell 3.5 percent in May from the year-ago month, the biggest drop since October 1982, Statistics Canada said. The report adds to evidence the world’s eighth-largest economy extended its contraction in the second quarter as the global slump saps orders for Canadian exports.

Output shrank at a 5.4 percent annual rate in the first quarter, the biggest drop since 1991, and will shrink at a 3 percent pace in the second quarter, according to a separate Bloomberg survey.

Manufacturing output fell 1.6 percent in May, reflecting a 21 percent tumble for carmakers and an 8.2 percent drop for companies that produce vehicle parts, the agency said. May’s drop in manufacturing brought to 16 percent the contraction of the industry over the previous 12 months.

Oil and gas extraction fell 2.6 percent as some facilities were shut for maintenance, leading to a 2.3 percent decline in the energy industry. Mining excluding oil and gas extraction dropped 0.9 percent, the statistics agency said.

Sixteen of the 21 major manufacturing groups posted monthly declines in output, Statistics Canada said. Construction activity fell 0.7 percent, the Ottawa-based statistics agency said.

Services-producing industries were unchanged in the month, as retail trade rose 0.6 percent and offset a 0.4 percent drop in wholesale trade, and a 2.9 percent decline in arts and entertainment activity.

Canada Economy Shrank 0.5% in May