Canada’s economy unexpectedly contracted in August, adding to signs of cooling following a torrid pace of growth in the first half of this year.
Highlights of August GDP Report
Canada’s GDP shrank 0.1% versus estimates for a 0.1% gain. It was the first monthly decline since Oct. 2016 and follows a flat reading in July
Drop was led by across-the-board weakness in goods-producing industries, including a 1% fall in manufacturing and a 1.4% decline in oil and gas
Statistics Canada cites maintenance shutdowns in manufacturing and conventional oil for decline
Most analysts are anticipating a slowdown in the second half of this year after growth was running at a 4 percent clip in the first six months of 2017. Tuesday’s numbers suggest the potential of a more pronounced drop than expected.
If the economy fails to post gains in September, third quarter annualized growth would be on pace for a sub-2 percent increase. Economists surveyed by Bloomberg News are forecasting growth to average 2.1 percent in the second half.
There were positives in the data, with 12 out of 20 subsectors posting gains. Services-producing industries posted a 0.1% increase
Non-durable manufacturing fell 2%, with chemical producers posting a 7.3% drop, the largest in the last 20 years. Statistics Canada cited “plant maintenance shutdowns and lower demand from export markets” for the drop
Shutdowns in Newfoundland impacted conventional oil and gas production, which was down 5.2% in August.
The real estate broker industry posted its first gain in five months, up 0.3%. Wholesalers were another source of strength, with that sector up 0.4%