Cooler Canadian housing sector starts to drag on growth
By Andrea Hopkins
OTTAWA (Reuters) - Canadian economic growth got a big boost from oil production in July, but a slowdown in construction was in evidence as well, an early indication of the pain that could come with the end of the country's years-long housing boom.
With clear signs of cooling in Vancouver real estate, the most expensive market, and only Toronto still booming, some economists are braced for a hit to construction and real estate, which they warn could trickle into other sectors as consumers pull back.
The shift would follow a two-year slump in Canada's energy sector caused by plunging crude prices.
"It's one weakness replacing another," said Paul Ashworth, chief North America economist at Capital Economics.
"While it's not necessarily the case that the economy will get worse, it does mean economic growth will continue below its potential, the unemployment rate could edge up, and we'll be even longer without the recovery that the Bank of Canada expects."
Gross domestic product grew 0.5 percent in July, topping analysts' forecasts for a gain of 0.3 percent, Statistics Canada said on Friday. [L2N1C60KH]
But GDP would have been essentially unchanged without the 19 percent bounce back in non-conventional oil production that followed wildfire-related shutdowns in the spring.
By contrast, Canadian housing construction fell 1.8 percent in July, while output by real estate agents and brokers fell 1.0 percent in the month. Continued...