Canada's economy stalls again in August, likely lost ground in September
SPY•Canada's economy was unchanged in August, while Statistics Canada estimated GDP would contract 0.1% in September. That would put third-quarter annualized growth at 1.3%, below the Bank of Canada's 2% projection.
1. August activity flat
Canada's economy stalled for a second consecutive month in August as gains in retail, manufacturing and construction were largely offset by declines in wholesale trade and public administration. Analysts had forecast GDP growth of 0.2% after no growth in July.
2. September estimate and sectors
Statistics Canada estimated GDP would contract 0.1% in September, putting annualized third-quarter growth at 1.3%, mainly due to declines in manufacturing and mining, quarrying and oil and gas extraction. Services-producing industries fell 0.1% in August, including a 1.4% decline in wholesale trade; retail grew 1.2%, manufacturing rose 0.3% and construction increased 0.2%.
3. Rate expectations and markets
The estimated third-quarter growth rate would be below the Bank of Canada's latest projection of 2%. Money markets expected the central bank to hold its key rate in December and raise it by 25 basis points in January to 2.75%; the bank raised the rate by 25 basis points to 2.50% on Wednesday. The Canadian dollar was up 0.26%, while two-year government bond yields fell 5 basis points.
