Canada’s real gross domestic product (GDP) increased 0.1% in August, beating analysts’ expectations of zero growth, according to new data from Statistics Canada.
This is a tick lower than the 0.2% growth seen in July.
The advance was driven in large part by a resurgence in oilsands production and a rise in financial services. These gains were partly offset by declines in retail and wholesale and manufacturing sales.
Overall, GDP is increasing at an annualized rate of 2%, which BMO Financial Group’s Douglas Porter said is “unremarkable.”
“While ever so slightly above the [Bank of Canada’s] latest point estimate of potential GDP growth (1.9%), it’s certainly not strong enough to unleash serious inflation pressure and/or bring down the jobless rate quickly,” he said in a note to investors.
“In fact, given recent rapid population gains in Canada, 2% growth may struggle to hold the jobless rate steady.”
Avery Shenfeld at CIBC Economics said the latest figures don’t support the need for much interest rate tightening, unless further data shows the economy is set to accelerate.
“We’re sticking to our call for the next hike to be in January, as we’ll need to see some 0.3% in this series, or a surge in employment, to give the BoC a reason to hike in December.”
The Canadian dollar fell just over two tenths of a cent on the morning’s news, reaching 76.04 cents U.S. as of press time.