Canada's economy flat in July as manufacturing and retail weaken, August seen up 0.2%
By Aboki Forex —
Canada's economic growth was flat in July, Statistics Canada said on Tuesday, in line with expectations and marking a slower start to the third quarter after three consecutive months of positive growth.
The reading came just before a new set of U.S. tariffs on Canada took effect in August.
Goods sector drags
Both goods-producing and services-producing industries were largely unchanged in July, the agency said. Goods-producing sectors account for roughly a quarter of gross domestic product.
Manufacturing output fell 0.9% in July, its first decline in four months. The drop was driven mainly by lower activity at petroleum refineries, which fell 6.2% during the month.
Mining, quarrying, and oil and gas extraction slipped 0.5%, a second consecutive monthly decline. Utilities and construction grew 1.7% and 1.3% respectively, offsetting most of the fall. Construction rose for a fourth straight month.
Retail and wholesale contract
On the services side, retail trade contracted 1% and wholesale trade declined 0.4% in July. Wholesale trade had been among the biggest contributors to growth in June.
Professional, scientific and technical services rose 0.3%, their largest monthly increase in 20 months. Real estate, rental and leasing activity was up 0.2%, with real estate expanding for a sixth consecutive month.
August rebound expected
An advance estimate from Statistics Canada indicated the economy was likely to rebound in August with monthly growth of 0.2%. The increase is expected to be led primarily by higher output in mining and quarrying and retail trade.
The Bank of Canada has forecast annualized economic growth of 1.5% in the third quarter.
Money markets are pricing in a 25-basis-point interest rate hike in December, even though most economists have forecast no change in interest rates throughout the year.
The Canadian dollar was trading 0.06% lower at C$1.4179 per U.S. dollar, or 70.53 U.S. cents. Yields on two-year Canadian government bonds fell 3.1 basis points to 2.567%.