Canada: Economic activity edges up in August
October 31, 2019
The economy expanded 0.1% month-on-month in August, up from July’s flat reading and just shy of analysts’ expectations of a 0.2% increase.
Rebounds in the manufacturing, construction and natural resource extraction sectors drove the uptick in economic growth in August. Moreover, robustness in the finance and insurance, professional services and real estate sectors also contributed to the uptick in the headline reading. That said, cooler weather in August weighed heavily on the utilities sector, while a contraction in wholesale trade and ongoing energy output distributions in the east of Canada—tied to unplanned shutdowns at the Hibernia offshore oil facility—dragged on economic growth in August.
Commenting on August’s print, Avery Shenfeld, chief economist and managing director at CIBC, noted:
“The sources of blame can shift from month to month, but the grade on the report card for the Canadian economy continues to be a ‘gentleman's C’, not failing, but not worthy of a gold star either.”
Meanwhile, assessing the outlook following August’s GDP reading, Brian DePratto, director at TD Economics, noted:
“All told, today's report leaves our third quarter tracking a relatively modest 1.2% annualized pace of growth. This is pretty close to the Bank of Canada's updated view (1.3%). This means that the data in the months ahead, particularly consumer spending and real estate activity, will matter for the path of monetary policy.”
Author: Steven Burke, Economist