A continuing rebound in oil and gas helped drive overall gross domestic product growth of 0.2% across Canada in August, according to Statistics Canada data released November 1.
The rise follows a revised increase of 0.4% in July, setting the economy on the path toward solid Q3 growth, said Douglas Porter, chief economist at BMO Financial Group.
“Even a modest 0.1% gain in next month’s report would leave growth for all of Q3 on track for something a touch better than our call of 3.3% (and the Bank of Canada is at 3.2%),” he said in a note to investors.
“Much of that strength is simply a rebound from the Q2 setback (-1.6%), and we look for growth to chill to just below a 2% pace in Q4, closer to the economy’s underlying trend.”
Output from goods-producing sectors increased 0.7% in August. The biggest contributor was oil and gas, which grew 1.4% in the month, making August the third consecutive month to see an increase in this sector. This strength was largely the result of a 14% rebound in potash production. The growth was enough to cancel out a 12% slide in the first four months of the year, and year-over-year growth in oil and gas inched up to 0.5%.
Mining was down 2.8% in the 12 months to August. This relates to poor performance in metals and drilling. The biggest slide was in construction, which was down 3.4% year-over-year.
The 0.2% GDP increase was in line with analysts’ expectations. What was not widely expected, however, was a stall in services-producing industries. Porter pointed out that a slide in 6 of the 15 subsectors runs contrary to the Bank of Canada’s expectations as announced in its most recent Monetary Policy Report. Retail trade and finance and insurance (both down 0.2% in the month) fared poorly, with some of these declines offset by strength in wholesale trade (up 0.5%) and transportation and warehousing (up 0.4%).
@EmmaHampelBIV
