Canadian economic activity increased 0.3% in May, after remaining essentially unchanged in April, Statistics Canada reported today.

Significant increases in retail and wholesale trade propelled the growth in May, while an important drop in oil and gas exploration dampened it.

The 0.5% gain in service industries more than offset the 0.1% decrease in the production of goods.

Gains were also registered in construction, manufacturing, mining excluding oil and gas, and utilities. In addition, the accommodation and food services, and financial sectors moved ahead.

On the other hand, declines were recorded in agriculture and forestry.

Retail trade jumped 2.5% in May, the largest monthly increase recorded since the 3.0% gain in November 2001. The growth in May followed rises of 0.3% and 1.4% in April and March respectively. The May increase was widespread and largely due to the strength in sales at new car dealers, used and recreational motor vehicle and parts dealers, building and outdoor home supplies stores, as well as clothing and general merchandise stores

Wholesale trade rebounded partially in May, rising 1.4%, following a strong 2% decline in April.

The energy sector fell 1.1% in May, as a result of the decline in natural gas extraction and the continuing plunge in oil and gas exploration, down 19.7%. However, petroleum extraction and utilities increased.

The output of the mining sector, excluding oil and gas, increased 1.5%. The substantial gains realized by the metal ore mines were reduced by the decline in non-metallic mineral mines. The end of labour disputes in metal mines helped this sector to rebound.

The construction sector rose 0.6% in May.

The home resale market rose sharply in May. For the second consecutive month, the number of units sold reached an all-time high. This resulted in a robust 2.4% increase for the real estate agents and brokers industry.

The manufacturing sector rose 0.3%. The 1% gain in the production of non-durable goods more than offset the 0.3% decline in durable goods manufacturing.

Industrial production (the output of mines, utilities and factories) slipped 0.2% in May. The drop in mining was partially offset by gains in manufacturing and utilities. In the United States, industrial production decreased 0.1% in May, due to the drop in utilities, while mining moved ahead and manufacturing was unchanged.

Output in the finance and insurance sector grew 0.3%. This increase was fuelled by a rise in trading on the financial markets in May. The accommodation and food services sector edged up 0.5% in May, following four consecutive months of declines or no growth. Air transportation decreased 1.2%.