Canada’s economy grew 0.2% in July, surpassing the consensus expectation of economists.
Statistics Canada said gross domestic product (GDP) increased 0.2% in July, following no growth in June. The July reading was better than the 0.1% growth expected among economists.
However, a preliminary reading for August showed that the economy once again slowed and registered no growth due to weakness in manufacturing and transportation.
The economic growth in July came as services-producing industries grew 0.2% and retail trade saw strong growth of 1%, helped by a 2.8% gain among motor vehicle dealers.
The public sector, which includes education and healthcare services, gained 0.3% in July, while the finance and insurance sector rose 0.5%.
Those gains were partly offset by declines in transportation and warehousing, which fell 0.4% in July, and accommodation services that declined 2% during the month.
Wildfires in Western Canada impacted several mine operations this summer and slowed economic growth in many areas of the country, noted Statistics Canada.
The slowing growth observed in the preliminary August GDP reading has ratcheted up expectations for a 50-basis point interest rate cut from the Bank of Canada at its next meeting on Oct. 23.
The Bank of Canada has reduced its trendsetting overnight interest rate by a total of 75-basis points since June of this year, lowering the rate to 4.25%.
In recent days, Bank of Canada Governor Tiff Macklem has said that it’s reasonable to expect more interest rate cuts in coming months.
