Canada’s surging economy took a pause in July, amid slumping oil and automobile production, and as a slowing housing market curbed construction and banking.
Highlights of Canada July GDP Report
GDP was little changed, ending an eight-month stretch of gains for Canada’s economy. Estimates were for a 0.1 per cent increase.
Oil and gas output was down 1.8 per cent, leading a 0.5 per cent drop for goods producing industries.
A 2 per cent gain in wholesale output led gainers.
Excluding wholesale, GDP would have been down 0.1 per cent.
The report shows the economy cooling off in the second half of the year, as most economists anticipated.
Over the past year, Canada’s economy has been running at a pace rarely seen in the past couple of decades, including an annualized 4.5 per cent rate in the second quarter. The above potential growth is soaking up all the remaining excess capacity in the economy, prompting the Bank of Canada to raise interest rates twice since July.
Even with very little growth in August and September, Canada’s economy would still probably be poised to grow at a rate of 2 per cent or more in the third quarter.
Monthly growth has averaged 0.4 per cent in the previous eight months, the best stretch of growth since at least 2010.
The figures seem to show the slump in housing has become a drag. Credit intermediation was down 1 per cent, residential construction dropped 0.9 per cent and activity at real estate agents declined 1.5 per cent. The finance and insurance sector’s decline of 0.6 per cent was the fastest since April 2015. Manufacturing dropped 0.4 per cent, the biggest decline since February, led by a 13.5 per cent drop in motor vehicles. Services-producing industries were up 0.2 per cent, led by wholesale. Overall construction was down 0.5 per cent, the biggest drop this year.