By Promit Mukherjee
OTTAWA, Oct 30 (Reuters) – Canada’s economy stalled in August for the second straight month as increases in the retail, manufacturing and construction sectors were largely offset by a drop in activity in wholesale trade and public administration, data showed on Friday.
Analysts polled by Reuters had forecast gross domestic product would increase by 0.2% in August after failing to grow in July.
– An advance estimate by Statistics Canada showed GDP is likely to contract by 0.1% in September, taking the annualized real growth by industry in the third quarter to 1.3%. This reading is mainly due to decreases in manufacturing and mining, quarrying and oil and gas extraction.
– That figure would be substantially lower than the Bank of Canada’s latest projection of 2% annualized growth in the third quarter.
– StatsCan said a decline in the services sector was mostly offset by a rise in activity in the goods-producing sector. That sector contributes roughly a quarter of GDP.
– Services-producing industries declined by 0.1%, led by a 1.4% drop in wholesale trade.
– The public sector aggregate, which comprises educational services, health care and social assistance and public administration, fell 0.2% in August, its first decline in six months, StatsCan said.
The utilities sector contracted by 0.4% in August, data showed, driven by a 0.5% contraction in electric power generation, transmission and distribution.
– Retail trade grew 1.2%, making up for the prior month’s contraction.
– The manufacturing sector grew 0.3%, and the statistics agency said it was the sector’s fifth increase in seven months. Manufacturing is one of the sectors most exposed to US tariffs.
– The construction sector grew 0.2% while mining, quarrying and oil and gas extraction was flat in the month.
– Money markets are pricing in expectations that the Bank of Canada will leave its key interest rate unchanged in December but raise it by 25 basis points in January to 2.75%. The Canadian central bank hiked that rate by 25 basis points 2.50% on Wednesday.
– The Canadian dollar was trading up 0.26% to C$1.3951 to the US. dollar, or 71.68 US cents. Yields on the 2-year Canadian government bonds were down 5 basis points to 2.618%.
(Reporting by Promit Mukherjee; Editing by Dale Smith and Paul Simao)
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