Economic activity in Canada retreated in May, as the country’s gross domestic product for the month saw a surprising contraction of 0.1%, Statistics Canada said today.

Economists had been looking for growth of 0.2% for the month.

May’s figure was down from the strong 0.4% growth seen in April.

The economy saw contraction in four of the six months between December 2007 and May 2008.

Statistics Canada said there was a “significant” decrease in the energy sector in May, while declines were also recorded in finance, forestry, construction and wholesale trade.

Activity was higher for manufacturing, retail trade and the public sector.

The energy sector’s output in May declined by 0.9% as natural gas extraction dropped, but crude oil extraction rose moderately.

Contract drilling was down in May because of unusually wet weather that prolonged the spring ice break-up by two weeks. Electricity generation fell 1.5%, as a larger portion of the demand was met through imports.

Declines in the building of single-family and semi-detached homes and industrial facilities pulled construction sector output down by 0.4% in May — the third straight monthly drop.

Manufacturing production edged up 0.1% in May, as activities in the printing sector, and computer and electronic product manufacturing made solid advances.

The retail trade sector grew by 0.1% in May as car dealers sold more new and used cars, and home centres and hardware stores had a good month.

South of the border, U.S. economic growth picked up in the second quarter as tax rebates energized consumers. The rebound followed a treacherous patch where the economy jolted into reverse at the end of 2007.

The U.S. Commerce Department reported that gross domestic product increased at an annualized rate of 1.9% in the April-June period.

Wall Street economists had forecast growth to clock in at a 2.4% pace.

Meanwhile, the he number of U.S. workers filing new claims for unemployment benefits jumped to a five-year high last week, a government report showed.

Initial claims for unemployment benefits rose 44,000 to 448,000 after seasonal adjustments in the week ended July 26, the U.S. Labor Department said, the highest level since April 2003. Economists in expected an 8,000 decline.