August 30, 2013 / 12:49 PM / 4 years ago

CORRECTED-UPDATE 1-Canada growth slows in second quarter, June GDP shrinks

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(Corrects 2nd paragraph to clarify 2.2 pct growth was in first quarter, not second)

* Second-quarter GDP 1.7 pct, annualized, from 2.2 pct in Q1

* June GDP contracts by 0.5 pct

* Alberta floods, Quebec construction strike hurt June performance

OTTAWA, Aug 30 (Reuters) - Canada's economy shifted into lower gear in the second quarter and the economy contracted in the month of June for the first time in six months, partly affected by a Quebec construction strike and flooding in Alberta.

Gross domestic product grew by 1.7 percent, annualized, in the quarter, Statistics Canada said on Friday, slowing from 2.2 percent growth in the first quarter. Statscan revised down the first-quarter number from 2.5 percent initially.

The lackluster performance was widely anticipated, with forecasters in a Reuters poll expecting growth of 1.5 percent and the Bank of Canada last month estimating a gloomier 1 percent gain.

In the month of June, GDP shrank 0.5 percent, as expected.

Consumers powered much of Canada's growth in the second quarter. The 0.9 percent growth in consumer spending was the strongest in 2-1/2 years thanks to car purchases and higher insurance claims after massive flooding in oil-capital Calgary in late June.

Government spending also drove the expansion to a lesser extent while business investment, net exports and inventories dragged the economy down.

Goods-producing industries fared poorly in the quarter, decreasing by 0.5 percent on weakness in the mining and energy sector, manufacturing and construction.

Services, on the other hand, expanded, led by retail and wholesale trade, finance, professional services and real estate services. (Reporting by Louise Egan and Alex Paterson; Editing by Theodore d'Afflisio)

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