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Home sales climbed in May, which should give a boost to the overall showing for gross domestic product.

The Globe and Mail

One month does not a trend make, but economists expect Statistics Canada to report this week that the economy picked up noticeably in May.

Observers believe Canada's economy expanded by between about 0.3 per cent and 0.5 per cent in May, better than the 0.1 per cent in each of the previous two months.

"Solid gains in manufacturing and wholesale activity and a decent gain in retail sales volumes point to a 0.3-per-cent rise in May Canadian GDP," said senior economist Benjamin Reitzes of BMO Nesbitt Burns.

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"That would be the biggest increase since January and puts the second quarter on pace for about 2.3-per-cent annualized growth," he added in a research note.

"The construction sector is also expected to provide a lift in May following steep declines over the prior two months, as housing starts rebounded sharply from the deep dive in early spring."

Home sales, having climbed markedly in May, should give a boost to the overall showing for gross domestic product.

If the estimates are correct, the Statscan report on Thursday would be a good sign after the weak readings of the past months.

"For the quarter as a whole, data so far are pointing to a rebound from the 1.2-per-cent (annualized) doldrums of the first quarter," said senior economist Randall Bartlett of Toronto-Dominion Bank, who expects to see second quarter economic growth of about 2.5 per cent.

"All told, the story is that of a solid bounce-back for the Canadian economy in the second quarter of 2014," he added.

Nonetheless, no change is expected to the projected timeline of Bank of Canada Governor Stephen Poloz and his colleagues when it comes to raising the benchmark interest rate.

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"With the bank brushing aside the recent runup in inflation, a material improvement in growth along with employment will have to be seen before Governor Poloz sounds any less dovish," said Nick Exarhos of CIBC World Markets.

"Our call for 2014 as a whole still stands at 2.1 per cent, and we'll have to wait until some time in 2015 for another leg down in the loonie to spur stronger corporate investment and exports."

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