Statistics Canada says real gross domestic product was down 0.1%
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Canada’s economy returned to growth as consumers headed back to restaurants and entertainment venues, propelling spending on services.
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Gross domestic product rose 0.7 per cent in August, Statistics Canada said in a flash estimate in Ottawa. That’s a reversal from July, which showed a 0.1 per cent contraction, according to the report.
Economists were predicting a 0.2 per cent drop in output for July, after early guidance indicating a weak start to the second half of the year. The agriculture and manufacturing sectors were among the contributors to the decline.
The August figure suggests Canada’s economic recovery is back on track, with consumers leading the way as businesses reopened amid a strong vaccine rollout in the early summer months. While a cool-down in the housing market and supply chain disruptions drove a shock 1.1 per cent annualized contraction in the second quarter, Friday’s report supports analysts’ views that consumption, particularly in service sectors, will offset other weaknesses.
While high-contact sectors still have room to recover, there’s near-term risk that the delta variant and a return to schools could prompt a slowdown in consumption if Covid cases tick up again.
The expansion in August will be a relief for the Bank of Canada, which in July predicted that third quarter output would come in at 7.3 per cent annualized. Friday’s GDP reading is the last one before the central bank updates its forecasts at its Oct. 27 policy decision.
