Canada’s real gross domestic product increased 0.1% in June, the first monthly increase since July 2008.

Economists had expected a monthly increase of 0.2%.

For the second quarter as a whole, real GDP decreased 0.9%, Statistics Canada said Monday. That’s lower than the 1.6% drop in the previous quarter.

At an annualized pace, GDP declined by 3.4% in the second quarter, slightly more than the 3% contraction expected by economists. But economists were encouraged by the news that GDP stopped contracting in June.

“Canada’s recession ended in June, and with the auto-related rebound in the manufacturing sector, we’re likely to see a big bounce in the third quarter, especially with inventories being replenished both at home and abroad,” said CIBC World Markets economist Krishen Rangasamy.

Final domestic demand increased 0.1% in the second quarter, StatsCan said.

Increased purchases of motor vehicles pushed consumer spending higher in the second quarter, while a rebound in housing resales sparked activity in the residential real estate market.

Consumer spending on goods and services advanced 0.4%, while investment in residential structures increased 1.7% in the second quarter, halting five consecutive quarterly declines.

Exports of goods and services and business investment in machinery and equipment were both down, but not as sharply as in the first quarter, StatsCan said.

Exports of goods and services dropped 5.2% in the second quarter, after falling 8.7% in the first quarter. Most categories of goods declined, particularly machinery and equipment, industrial goods and materials, and energy products.

Despite the return to growth in June, interest rates will likely remain low until stronger growth returns, according to Dawn Desjardins, assistant chief economist at RBC Economics Research.

“The Bank of Canada will likely be encouraged by indications that the economy is starting to pull out of recession and recent reports support the Bank’s view that the economy will return to positive growth in the third quarter,” said Desjardins. “However, to ensure that this profile is realized, the Bank of Canada will likely keep monetary conditions very accommodative, maintaining the overnight rate at the current 0.25%.”

IE