Statistics Canada reports GDP grew 0.2% in July, led by retail, public, and finance sector
Statistics Canada reported that real gross domestic product (GDP) rose by 0.2 percent in July, following minimal change in June.
Despite disruptions from wildfires affecting transportation, warehousing, and accommodation services, the services-producing industries expanded by 0.2 percent.
Retail trade, the public sector, and the finance and insurance sector contributed significantly to this growth. Goods-producing industries edged up by 0.1 percent, with utilities and manufacturing sectors making notable contributions. In total, 13 out of 20 sectors experienced growth in July.
The retail trade sector saw its largest monthly growth since January 2023, increasing by 1.0 percent.
Motor vehicles and parts dealers, with a 2.8 percent rise, were the largest contributors, driven by increased retail activity at new car dealerships, which offset a decline in June. Gasoline stations, however, saw a 1.8 percent contraction, tempering overall growth in the sector.
The public sector continued to grow, increasing by 0.3 percent in July, marking the seventh consecutive month of expansion.
Public administration grew by 0.4 percent, driven primarily by local, municipal, and regional public administration. Educational services and health care and social assistance also contributed to the growth, with both sectors rising by 0.2 percent.
The finance and insurance sector posted a 0.5 percent gain, marking its second consecutive month of growth. The sector was bolstered by financial investment services, which grew by 1.8 percent, with mutual funds and financial market activity leading the charge.
Mortgage and non-mortgage debt both rose, contributing to a 0.3 percent increase in banking and other depository credit services.
The utilities sector expanded by 1.3 percent, with electric power generation, transmission, and distribution increasing by 1.0 percent due to higher demand for electricity for cooling purposes. Natural gas distribution surged by 3.9 percent, largely driven by increased industrial use.
Manufacturing saw a 0.3 percent increase, recovering from a decline in June. Non-durable goods manufacturing was the main driver of this growth, rising by 1.3 percent.
Chemical manufacturing, particularly pharmaceutical and medicine products, led the gains within this sector, while food manufacturing also rose by 1.2 percent, driven by record canola crushing levels.
Wildfires had a negative impact on several industries in July, particularly transportation and warehousing, which contracted by 0.4 percent for the second consecutive month.
Rail transportation declined by 4.6 percent, with wildfires in Jasper National Park causing traffic suspensions and halting freight movements. Iron ore mining fell by 4.8 percent due to temporary shutdowns in response to wildfires in Labrador and Northern Quebec.
Still, the mining and quarrying subsector rose by 0.4 percent, with copper, nickel, lead, and zinc ore mining increasing by 7.1 percent, thanks to the resolution of a labour strike at a British Columbia copper mine.
The construction sector, on the other hand, contracted by 0.4 percent, making it the largest detractor to growth in July. Non-residential building construction dropped by 1.7 percent, continuing its decline for the third time in four months.
Preliminary data from Statistics Canada indicates that real GDP remained flat in August, as declines in manufacturing and transportation were offset by gains in oil and gas extraction and the public sector. This advance estimate will be updated on October 31.
According to BNN Bloomberg, “the Canadian economy showed more signs of weakness that should keep the Bank of Canada cutting interest rates to boost growth.”
Preliminary data indicates that GDP remained flat in August, despite a 0.2 percent expansion in July, with an annualized growth rate of 1 percent for the third quarter—well below the central bank’s forecast of 2.8 percent.
The report noted, “After Friday’s report, markets raised the odds of a half percentage point cut to slightly higher than a coin flip,” as economic growth continues to track below expectations.
Charles St-Arnaud, chief economist at Alberta Central, commented, “[The] release continues to show that Canadian growth remains sluggish and that the amount of slack in the economy continues to rise,” adding that he expects the Bank of Canada to cut rates by half a percentage point at its next meeting.
