More Rate Cuts for Canada? Advance August GDP Looks Flat

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Friday, September 27, 2024

Soft economic data continued in July for Canada, as gross domestic product registered a 0.2 percent increase, while advance estimates for August showed zero growth. July's print was slightly higher than the advance estimate for an unchanged reading and added to the softer readings that began in May. 

In July, 13 of the 20 sectors expanded, led by a 1.0 percent gain in retail trade. In that sector, motor vehicles and parts dealers expanded 2.8 percent, driven by higher retailing activity at new car dealers, while a 1.8 percent contraction at gasoline stations tempered the overall growth in the sector. The public sector, as well as finance and insurance, also contributed to growth. 

The country’s wildfires impacted multiple industries and dampened growth for July. Wildfires that spread through Jasper National Park and the Rocky Mountains caused a halt of certain commodities via rail freight and dragged the sector down. The fires also caused the closure of several iron ore mines. The construction sector fell for the second month.

The economy looks to show more weakness in August, as advance information indicates that real GDP was essentially unchanged, increasing predictions that the Bank of Canada will continue to cut monetary policy to boost economic growth. Official GDP data for August will be updated on October 31, 2024.

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