Economists polled by Reuters had expected the economy ​to expand by 0.2% in May. Statistics Canada revised April's growth up to 0.6% ​from 0.5%, the highest month-on-month gain since July 2025.

In a flash estimate, Statscan ⁠said June GDP looked to have increased by 0.2%.

This indicates annualized second-quarter growth of 3.4%, significantly ​higher than the Bank of Canada's July 15 forecast of 2.5%, and the highest annualized quarterly ​increase since the 4.3% seen in the first three months of 2023.

The central bank left its benchmark overnight rate unchanged at 2.25% on July 15 and said growth would strengthen in the second half of the year as inflation ​pressures eased and firms continued to adapt to U.S. tariffs.

"The economy appears to have found ways ​to navigate the current cloud of uncertainty relating to trade with the United States," said Royce Mendes, managing director ‌and ⁠head of macro strategy at Desjardins.

The Canadian dollar firmed slightly after the data to C$1.4035 to the U.S. dollar, or 71.25 U.S. cents.

Analysts did note though that the May and June figures were likely boosted by one-off factors such as the FIFA soccer World Cup, hiring for a national census ​and the fact that ​oil facilities had put ⁠off scheduled maintenance to take advantage of higher prices.

Money markets are pricing in a hold on rates for the rest of the year.

"We continue ​to see slack in the economy fading only slowly and for the ​Bank of Canada ⁠to keep interest rates on hold throughout the remainder of the year," said Andrew Grantham, a senior economist at CIBC Capital Markets.

Statistics Canada said goods-producing industries expanded 0.6% while services-producing industries posted a 0.2% ⁠gain.

The mining, ​quarrying, and oil and gas extraction sector expanded 1.0% in ​May. The oil and gas extraction subsector rose 0.7% in May, due to higher oil sands extraction.