Canada's GDP Slows in August, Slight Uptick Seen for Q3

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Friday, November 1, 2024

Canada’s GDP likely cooled in the third quarter as growth tracked below the Bank of Canada’s reduced projections, increasing the debate for another 50 basis point cut before the end of the year.

GDP was flat for August, as gains in finance and insurance were offset by the manufacturing sector. Several temporary factors stalled growth in August, including work stoppages at the country’s two largest rail companies as well as maintenance at car manufacturing factories. For the month, goods-producing industries contracted by 0.4 percent, reaching their lowest level since December 2021, including a 1.2 percent drop in the manufacturing sector. The utilities sector also contracted, posting its first decline in three months.

In addition to finance and insurance, gains were seen in mining, quarrying and gas and oil extraction. 

Economic growth for July also was revised downwards, and preliminary data indicates that growth is likely to have rebounded to 0.3 percent in September. Official third-quarter GDP will be available on November 29, 2024.

As the Bank of Canada tries to revive business investments, output, and consumer demand, they have lowered its key interest rate four consecutive times to 3.75 percent after inflation returned to its 1 percent to 3 percent control range. The central bank’s next rate announcement is scheduled for December 11, 2024.

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