Canada: Economic activity stalls in July, ending a streak of four consecutive monthly gains
Economic growth was unchanged month-on-month in July, down from June’s 0.2% increase and undershooting analysts’ expectations of a 0.1% expansion.
The mining, quarrying, and oil and gas extraction sector was the biggest drag on growth, due to maintenance at the Hibernia oil production facility following an oil leak in July. Moreover, the volatile construction and manufacturing sectors also fell in July. On a brighter note, wholesale and retail trade increased steadily, supported by solid wage growth and a tight labor market. Meanwhile, the real estate sector accelerated in July, as lower mortgage rates led to a rise in home sales.
Commenting on July’s print, Brian DePratto, a senior economist at TD Economics, noted that:
“Today’s headline was definitely soft, but the underlying story was not […]. If you’re looking for generalized weakness in Canada’s economy, today’s report ain’t it.”
Providing some outlook on the economy following July’s GDP reading, Royce Mendes, a senior economist at CIBC, noted:
“Tracking for the third quarter is still running a touch ahead of the Bank of Canada’s last projection of 1 ½%, but with the external environment looking weak and domestic households no longer as spendthrift, a rate cut around the turn of the year is still in our base-case forecast.