According to a Reuters poll, the July number is somewhat lower than the 0.1 percent gain expected by economists. According to preliminary estimates, GDP increased by 0.1 percent in August, with gains in wholesale trade, banking, and insurance partially offsetting declines in retail and oil and gas.
Statistics Canada said on Friday that the Canadian economy witnessed no growth in July and is on course to post a modest gain in August, indicating that the economy is slowing as a result of the Bank of Canada’s interest rate hikes.
“Real GDP has barely moved over the last six months, which appears weaker given the population is rising at a 3% per year run rate,” BMO senior economist Robert Kavcic wrote in a report on Friday. “Canada is currently struggling to grow.” He went on to say that while the Bank of Canada will closely watch core inflation and consistent wage growth before making its next decision in October, “struggling growth argues for them to remain on hold and lean on the tightening that has already been put in place.”
The Canadian economy has come to a halt as a result of the Bank of Canada’s aggressive tightening program, in which it has raised its benchmark interest rate ten times since March to combat surging inflation.
After the data was made public, Royce Mendes, managing director and head of macro strategy at Desjardins, wrote in a note, “The economic data in Canada continue to paint a picture of an economy that has stalled.”
Although inflationary pressures are still stubbornly over the Bank of Canada’s target range, the economy’s slowdown should offer central bankers hope that their medication is gradually taking effect.
According to July data, service-producing sectors increased by 0.1 percent, while goods-producing sectors decreased by 0.3 percent.
The manufacturing sector contributed the most negatively in July, dropping 1.5 percent, the greatest monthly decline since April 2021. This was due in part to the British Columbia port strike, which had the greatest impact on chemical production, which dropped by 3.6 percent.
At the same time, certain industries recovered in July after being disrupted in June by wildfires across the country. Mining (excluding oil and gas) increased by 4.2 percent in July, while lodging and food services increased by 2.3 percent.
