The Canadian economy grew 0.3 per cent in August on higher energy activity, more evidence the country did not slide into recession in the third quarter.
The gross domestic product expanded after growth of 0.4 per cent in July and 0.2 per cent in June, Statistics Canada said Monday. August's better-than-expected increase was fuelled by the energy sector; excluding that, real GDP was unchanged.
The report comes after economists have downgraded their Canadian growth forecast in recent months. Last week, the Bank of Canada slashed its own projection for this year and next, saying the outlook has “weakened” due to a softer global economy.
“Canadian growth may not have done too badly in the final quarter...hinting that a recession may have been averted this year,” said Krishen Rangasamy, senior economist at National Bank Financial in a note. “Our own concerns are mostly about next year when fiscal drag is expected to hit both here and in the U.S.”
Output in mining and the oil-and-gas sector jumped 3.3 per cent, a bounce after wildfires in Alberta weighed on energy production in May.
“Underlying growth remains much less impressive,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns, who says annualized growth in the four months since April was just under 2 per cent -- “likely not a bad gauge of the economy's underlying trend.”
Growth in August also came from the finance and insurance sector as well as from retail trade and construction. Output rose in the financial sector on higher volumes of trading in the stock market.
On the flip side, wholesale trade, manufacturing, utilities, and some tourism-related industries declined. Factory activity fell on weaker production of mineral, wood, chemical and paper products.
Activity in the public sector was unchanged as increases in education and health care were offset by a decrease in federal government activity due to the winding down of the 2011 census.
Economists had forecast an August reading of 0.2 per cent. Statistics Canada revised its estimate for July's GDP up by one notch.