Canada: Economic activity remains broadly stable in August
GDP was flat month-on-month in seasonally-adjusted terms in August (July: 0.0% mom), weighed on by interest rates, inflation, forest fires and drought conditions. On an annual basis, monthly GDP grew 0.9% in August, which was below July’s 1.1% expansion and marked the worst result since February 2021.
In August, mild growth in services was offset by lower manufacturing and agricultural output.
Flash data by the statistics office suggested that GDP was unchanged month on month in September, with decreases in mining, quarrying, and oil and gas extraction and utilities partially offset by increases in the construction and public sectors. This means the economy should have also flatlined in Q3 as a whole, which is broadly in line with our panelists’ projections but below the Central Bank’s forecast for a 0.8% annualized quarterly expansion. For Q4, our Consensus is currently for the economy to broadly stagnate for the third straight quarter.
On the outlook, TD Economics’ Marc Ercolao said: “Higher interest rates are certainly doing their part to tamp down excess demand, and we continue to expect below-trend growth for the next couple of quarters.”