Canada’s economy posts surprise 0.1% gain in August

By Julie Gordon

OTTAWA (Reuters) – The Canadian economy grew by a surprise 0.1% in August, buoyed by strong agricultural and retail activity, with another 0.1% increase likely in September and third quarter annualized GPD seen up 1.6%, Statistics Canada said on Friday.

Analysts polled by Reuters had forecast GDP would be flat in August. The flash estimate for annualized GDP, which may change when a final tally is released next month, is slightly above the Bank of Canada’s third quarter forecast of 1.5% growth.

The central bank increased its policy rate this week by 50-basis points to 3.75% and said it was nearing the peak of its tightening campaign, though it was not there yet.

Statscan said a rebound in services in August partially offset a decline in goods-producing industries. The retail trade sector rose 1.2%, bouncing back from July, on higher sales at the gas pump, at grocery stores and in sporting goods shops.

The agriculture and forestry sector rose 3.9%, led by increased crop production as better growing conditions in Western Canada drove higher yields.

That was offset by a contraction in manufacturing, with sector output falling to its lowest level since January. Construction also declined for the fifth straight month, though building activity remains well above pre-pandemic levels.

The Canadian dollar was trading 0.3% lower at 1.3610 to the greenback, or 73.48 U.S. cents.

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