Canada: Economy flatlines in August
GDP reading: GDP was flat month-on-month in seasonally adjusted terms in August (July: +0.1% mom), in line with the preliminary estimate and market expectations. On an annual basis, monthly GDP rose at a more moderate pace of 1.3% in August (July: +1.4% yoy).
Drivers: In August, a slight increase in services activity was offset by lower manufacturing output. Within manufacturing, chemicals and pharmaceuticals saw particularly sharp falls, while the rise in services output was dampened by work stoppages at rail companies hitting transport activity.
GDP outlook: GDP is estimated to have risen 0.3% in September due to increases in finance, construction, and retail partially offset by decreases in mining, quarrying, and oil and gas extraction. This suggests that the economy expanded by close to 1% in quarter-on-quarter annualized terms over Q3 as a whole—a particularly disappointing reading given the current fast rate of population growth.
Panelist insight: Desjardins’ LJ Valencia said:
“In September, the strong advance in housing starts and home sales point to signs of an economic tailwind. Headline job numbers also increased, but it wasn’t enough to keep up with the current population trend, suggesting the persistence of slack in the third quarter. Indeed, real GDP continues to lag the pace of population growth.”