Canada’s economy was unexpectedly unchanged in July – after four months of growth – as the country’s mining, quarrying and oil and gas extraction sectors contracted, Statistics Canada data showed on Tuesday.
Analysts in a Reuters poll had predicted an increase of 0.1 per cent in July after a 0.2-per-cent increase in June. Over all, 12 of the 20 industrial sectors monitored expanded on the month, while eight declined, the national statistics agency said.
The Canadian dollar weakened to $1.3290, or 75.24 US cents, after the July GDP miss.
Canada is in the midst of a national election set for Oct. 21 where economic issues, such as the cost-of-living, have played a central role on the campaign trail. Meanwhile, the Bank of Canada has held interest rates steady since last October as it monitors Canadian economic data.
“Today’s data are consistent with the [Bank of Canada’s] view that growth over the second half of the year is likely to be slightly slower than the first half,” said Josh Nye, a senior economist with RBC Economics, adding there were “few signs of a broader slowdown.”
“That gives the central bank time to be patient in assessing whether a bit more accommodation is needed to offset external headwinds,” Mr. Nye said in a note.
Statscan said goods-producing industries were down 0.7 per cent in July as outputs from all sectors – excepting utilities – declined. Services-producing industries were up for the fifth consecutive month, rising 0.3 per cent as the majority of its subsectors grew.
Canada’s mining, quarrying and oil and gas extraction sector dropped by 3.5 per cent in July, the largest decrease since May, 2016, Statistics Canada said. Support activities for those same industries slumped by 11.5 per cent, the largest decline since December, 2018, after three consecutive months of growth, as drilling and lower rigging services contracted.
Oil and gas extraction (except oil sands) fell 4.7 per cent, the biggest monthly decline seen in a decade, the agency said – thanks, in large part, to a shutdown of some offshore production facilities in Newfoundland and Labrador because of maintenance issues.
Declines were also reported in the construction sector, which dropped by 0.7 per cent. Manufacturing fell for the second straight month, falling 0.1 per cent, while the transportation and warehouse sector contracted by 0.5 per cent on slower rail transportation. Real estate and related industries increased 4.2 per cent, while utilities rose by 1.5 per cent. Wholesale trade jumped 1.1 per cent, the sixth increase in seven months, Statscan said.
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