Canada’s economy posted a second consecutive month of growth in August, more than offsetting the decline earlier in the year.
According to Statistics Canada, Canadian GDP in August rose 0.3% following growth of 0.6% in July. The gains in August exceeded market expectations of only a 0.1% increase, according to RBC. These gains more than offset the 0.5% decline experienced in June that was primarily due to the effects of the floods in Alberta and a construction strike in Quebec.
Statistics Canada reported that economic output growth was led by increased output in the mining and oil and gas sectors. Oil and natural gas production rose 2.8% and increased drilling and rigging activities boosted support activities for mining and oil and gas also by 2.8%.
Further gains in agricultural output of 0.8% helped to offset declines in manufacturing, stemming from declines in chemical production and in beverage and tobacco manufacturing.
Within the service sector, nearly all industries posted gains with the exception of finance and insurance. Retail trade grew 0.3% from gains in food, clothing and building material sales, offsetting declines in gasoline, electronics, appliances and motor vehicles.
RBC said in a research note that the GDP increases in July and August could lead to an annualized growth rate of 2.8% in the third quarter, which is above the Bank of Canada’s forecast of 1.8%. While the growth is “above potential,” RBC said the increase likely wouldn’t create any inflationary pressures that could lead Canada’s central bank to again warn it would increase interest rates.
