Canada’s economy grew 0.2 per cent on a monthly basis in July, Statistics Canada said on Friday, more than analyst had expected. However, quarterly growth is still tracking well below the Bank of Canada’s forecast.
While July’s gross domestic product (GDP) growth was more than the 0.1 per cent rate analysts had expected, advance estimates show GDP was unchanged in August, as increases in oil and gas extraction and the public sector offset decreases in manufacturing, transportation and warehousing.
“Canada’s economy bounced higher in July, but growth seemingly faded again in August,” Desjardins managing director and head of macro strategy Royce Mendes wrote in a research report on Friday.
“Growth appears to be tracking just over 1 per cent for Q3, well below the Bank of Canada’s 2.8 per cent forecast.”
Desjardins expects the Bank of Canada to cut its benchmark rate by 50 basis points at its next announcement in October.
Bank of Canada Governor Tiff Macklem noted in a speech on Tuesday that with continued progress on inflation it is reasonable to expect further cuts in the policy rate. Inflation in August hit the Bank’s two per cent target. Macklem also said the central bank wants to see economic growth strengthen further so that inflation stays close to the 2 per cent target, but that “some recent indicators suggest growth may not be as strong as we expected.”
Statistics Canada said the retail trade sector was the largest contributor to overall growth in July, recording the largest monthly growth rate (1 per cent) since January 2023. Increases in the public sector and the finance and insurance sector also drove growth. July’s growth came despite negative impacts from wildfires on transportation, warehousing and accommodation services, Statistics Canada noted.
Statistics Canada said service-producing industries grew by 0.2 per cent in July, while goods-producing ones expanded 0.1 per cent.
More to come.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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