WRAPUP 1-Canada's economy stalls in July after 6-month growth streak

Tue Sep 30, 2014 10:50am EDT
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By David Ljunggren

OTTAWA, Sept 30 (Reuters) - Economic growth in Canada stalled unexpectedly in July, breaking a six-month streak of gains and ensuring the Bank of Canada will be in no rush to raise interest rates.

Statistics Canada said on Tuesday that real gross domestic product in July was unchanged from June. Market analysts had expected a 0.2 percent advance.

The Bank of Canada, which has kept its key rate at a near-record low 1.0 percent for more than four years, says there is no chance of an increase until it sees signs of a sustained economic recovery.

Among economic categories tracked by Statistics Canada, mining, quarrying and oil and gas extraction fell by 1.5 percent. Utilities declined by 2.3 percent on lower demand for electricity and natural gas amid cooler-than-average temperatures in some regions.

"After a nice run of strength in the prior six months, when growth averaged 0.3 percent per month (3.4 percent annualized), the Canadian economy seriously stubbed its toe in July," said Doug Porter, chief economist at BMO Capital Markets.

"Today's disappointing report will not move the bank's tightening yardsticks one inch down the field," he said in a note to clients.

Manufacturing output grew by 1.0 percent in July from June on strength across most sectors. The public sector increased by 0.5 percent.

The data briefly pushed the Canadian dollar to a more than six-month low against the greenback. It hit C$1.1205, or 89.25 U.S. cents, down from Monday's close of C$1.1153, or 89.66 U.S. cents.   Continued...