Canadian economy shrinks in May due to Alberta wildfires; RMPI drops more than expected

Canada's economy contracted in May on a monthly basis due to the Alberta wildfires, which led to production cuts in the region.

According to fresh figures released by Statistics Canada, the Canadian GDP dropped 0.6% in May, after rising 0.1% in the preceding month. Economic desks expected Canada's economy to contract 0.5% in the reported month. On an annual basis, the Canadian GDP advanced 1.0% in the fifth month of the year, down from the 1.5% rise posted in April, whereas market analysts anticipated a decrease to 1.3%. Furthermore, the Raw Materials Price Index (RMPI) that measures price changes for raw materials purchased by industries in Canada increased 1.8% in May, following last month's upwardly revised figure of 7.0%, while analysts predicted the RMPI to come in at 3.2% in the reported period. The latest Conference Board of Canada report lowered its projections for economic growth in 2016 to 1.4% from 1.6%, despite a strong growth in the Q1, which was mainly driven by consumer spending, net exports and an increase in residential construction. But the local economy took a hit from the Fort McMurray wildfires in May and June that shut down around 40% of oil sands production in Canada. Canada's central bank left its benchmark interest rate unchanged at 0.5% at its last policy meeting.