Canada’s economy contracted at a faster pace than expected in May, according to figures released Friday.

Statistics Canada said Canadian gross domestic product fell by 0.5%. Economists had forecast a drop of 0.4% from the previous month.

By comparison, April saw Canada’s economy contract by 0.1%.

The energy and manufacturing sectors were the main contributors to May’s decline. Construction and wholesale trade also decreased.

The output of the energy sector dropped a further 2.3% in May. Oil and gas extraction as well as associated support activities posted significant declines.

Manufacturing activity fell by 1.6% in May compared to April. Since May 2008, manufacturing GDP has contracted by 15.8%.

“About half of the decrease was due to a 21% drop in motor vehicle manufacturing, following three months of recovery, and an 8.2% decline in parts production. The temporary closure of two assembly plants, combined with the discontinuation of the production of a model line in Canada, contributed to this decline,” StatsCan said.

U.S. Q2 GDP drop smaller than feared

The U.S. economy shrank at an annualized rate of 1% in the second quarter of the year, the U.S. Commerce Dept. said Friday.

The pullback in the April-June quarter was smaller than the 1.5% annualized contraction that economists had been projecting.

Commerce also said the pace of contraction in the first quarter of 2009 was worse than projected. The U.S. economy shrank at a 6.4% annualized pace, which was revised downward from an earlier estimate of 5.5%.

IE