Reports of a recession were greatly exaggerated
The tone from economists was, at times, pointed. Douglas Porter, chief economist at BMO Capital Markets in Toronto, framed May’s result as a rebuttal to months of downturn anxiety: “it’s now clear that the underlying economy is still grinding ahead, with GDP up 1.7% from year-ago levels.”
Porter, who previously told Canadian Mortgage Professional that the Bank of Canada is “on hold for the foreseeable future,” revised BMO’s full-year GDP forecast up to 0.8% following the release. He also noted that Q3 growth is expected to cool back below 2% as temporary tailwinds unwind.
Marc Ercolao, economist at TD Economics in Canada, was equally clear-eyed about what the data does and does not signal. In his view, May’s result “reinforces confidence in the Bank of Canada’s view that growth resumed in the second quarter,” but does not warrant a policy response.
“Today’s report is consistent with our expectation that the Bank has cover to remain on the sidelines for the remainder of the year,” he wrote, adding that growth will likely take a breather in Q3 as Census hiring and FIFA World Cup activity fade.
A solid quarter with caveats
Andrew Grantham, executive director and senior economist at CIBC Economics in Toronto, offered perhaps the most measured read. He acknowledged that annualized Q2 growth of 3.4% was “almost a full percent higher than the Bank of Canada’s July monetary policy report forecast,” but was quick to flag that the headline figure was “flattered somewhat by a reversal of one-off factors” — including below-normal spring maintenance in the oil sector and a temporary lift from 2026 Census hiring.