The Canadian economy contracted in May, the fifth consecutive monthly decrease, increasing the possibility the country slipped into a recession in the first half of the year.
Statistics Canada said Friday real gross domestic product fell 0.2% in May due mostly to weakness in manufacturing, mining, quarrying and oil and gas extraction as well as wholesale trade.
Read: Experts split on rate cut’s impact
Economists had expected no change for the month, according to Thomson Reuters.
“There is no sugar-coating this one,” said BMO chief economist Douglas Porter in a note to clients. “It’s a sour result.”
The drop in the economy came as goods-producing industries fell 0.6% in May, including weakness in manufacturing and the oilpatch.
Manufacturing output contracted 1.7% in May, while mining, quarrying, and oil and gas extraction fell 0.7%.
Read: Canada not in a recession, economists say
Meanwhile, the service-providing industries edged down 0.1% in May after increasing for three consecutive months.
Wholesale trade fell 1% in May, but retail trade rose 0.5% for the month.
The Canadian economy contracted at an annual pace of 0.6% in the first quarter.
Concerns of a possible recession, defined as two consecutive quarters with no economic growth, have grown in recent weeks.
But some economists have said Canada hasn’t exhibited some of the classic hallmarks of a recession, citing the country’s job growth and stable employment rate.
Bank of Canada governor Stephen Poloz, in deciding to cut his key interest rate by a quarter of a percentage point to 0.5% in an effort to boost the economy, carefully avoided saying the word “recession.”
“I’m not going to engage in a debate about what we call this,” Poloz said earlier this month after the central bank predicted the economy contracted an a 0.5% annual pace in the second quarter.
Read: Yellen says rate hike likely this year
Still, low oil prices and weak exports have bruised the economy this year, casting doubt on the federal government’s promise to balance the books as it heads into an election.
Estimates for economic growth this year have been slashed and now stand below the levels forecast when Ottawa tabled its budget in the spring.
But Prime Minister Stephen Harper said last week that his government was “well ahead” of its own forecast for a balanced budget despite the economic struggles.