06:34 AM EDT, 08/01/2024 (MT Newswires) -- Canada's May gross domestic product (GDP) growth was a "pleasant" surprise, coming in a tick above expected at 0.2% m/m on Wednesday, said Bank of Montreal (BMO).

The advance estimates for June and Q2 were also better than anticipated, with the quarter nicely outpacing the Bank of Canada's (BoC's) forecast at just over 2% versus 1.5%.

Unfortunately, the ongoing caveat for Canadian activity figures is that population growth has been providing a big lift, masking more meaningful "underlying softness," stated the bank. Indeed, looking at GDP per employed person, there's been a consistent decline since Sept 2022.

This crude measure of productivity has steadied in the past few quarters, pointed out BMO. Even so, it remains only marginally above 2017 levels, highlighting the country's perennial productivity struggles.

Given the ongoing rapid rise in the population and labor force, GDP gains need to accelerate or per capita GDP (and more broadly Canadian living standards) will remain sluggish, according to the bank.