July 29, 2016 / 12:47 PM / 2 years ago

UPDATE 1-Canadian economy shrinks more than expected in May as wildfires hit

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OTTAWA, July 29 (Reuters) - Canadian economic growth fell in May in its biggest monthly decline since March 2009 as wildfires in northern Alberta caused a sharp drop in oil extraction, data from Statistics Canada showed on Friday.

Monthly gross domestic product fell 0.6 percent in May, topping economists’ expectations for a decline of 0.4 percent.

The wildfires that started in May around the Fort McMurray area in Alberta disrupted production in the province’s oil sands and forced residents from their homes.

As a result, output from the non-conventional oil extraction industry saw a 22 percent drop for the month. Activity in the goods-producing sector overall fell 2.8 percent, including a 2.4 percent decline in manufacturing.

However, there was little evidence that the wildfires significantly affected other sectors of the economy, the government’s statistical agency said.

Excluding the decline in non-conventional oil extraction, economic growth edged down just 0.1 percent in May. The services sector held up relatively well with a 0.3 percent gain.

Still, the figures were likely to underscore expectations of a contraction for the second quarter as a whole, due to the wildfires and a snap-back from strong export activity at the beginning of the year. Policymakers anticipate growth will rebound sharply in the third quarter.

Reporting by Leah Schnurr Editing by W Simon

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