Canadian economic growth slows in August, goods sectors gain

Tue Nov 1, 2016 9:41am EDT
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By Leah Schnurr

OTTAWA (Reuters) - The pace of Canadian economic growth slowed as expected in August, data from Statistics Canada showed on Tuesday, reinforcing expectations that the Bank of Canada will maintain its cautious stance.

The 0.2 percent advance was in line with a Reuters poll of economists. July's growth was revised lower to 0.4 percent from an initially reported 0.5 percent increase.

While that supported expectations that the economy bounced back in the third quarter, economists expect the strength of the rebound will wane in the final quarter of the year. The economy contracted in the second quarter due to the impact of wildfires in Alberta.

Much of August's output growth came from goods-producing sectors, including mining and construction. Activity in the mining, quarrying and oil and gas extraction sector rose 1.4 percent, driven by a surge in potash mining due to higher exports for the commodity.

Oil and gas extraction rose 0.9 percent as production capacity returned to levels seen before maintenance shutdowns in April and wildfires in northern Alberta in May.

Derek Holt, head of capital markets economics at Scotiabank, said the breadth of activity in August was not strong.

"(The Bank of Canada) will take it with a bit of a cautious optimism slant to it, but there are enough red flags in terms of the underlying details to reaffirm their cautious stance of late," said Holt.

The Canadian dollar weakened slightly against the greenback following the data. [CAD/]   Continued...

An FCA assembly worker works on the production line of the all-new 2017 Chrysler Pacifica minivan at the FCA Windsor Assembly plant in Windsor, Ontario, May 6, 2016. REUTERS/Rebecca Cook