(Adds market and analyst reaction, oil and gas extraction)
By Randall Palmer
OTTAWA, Sept 30 (Reuters) - The Canadian economy grew for the second straight month in July after contracting for the first five months of 2015, helping cement the idea that a recession was short-lived and providing fodder to the ruling Conservatives ahead of the Oct. 19 election.
Statistics Canada reported on Wednesday that real gross domestic product (GDP) grew by 0.3 percent in July, exceeding the 0.2 percent growth forecast in a Reuters survey of economists.
The federal agency revised June’s gain down to 0.4 percent from 0.5 percent, mainly due to an upward revision in the dollar level of May’s GDP from the previous estimate.
“After a growth stumble in the first part of the year, the Canadian economy appears to be picking itself back up,” said Nick Exarhos at Canadian Imperial Bank of Commerce (CIBC) World Markets.
With a collapse in oil prices causing Canada’s economy to shrink in the first two quarters, the economy met the textbook definition of recession and has figured prominently in the federal election campaign. Opposition parties contend the Conservatives have been bad economic managers.
Conservative Finance Minister Joe Oliver scheduled a news conference for later on Wednesday morning, undoubtedly to trumpet the renewed growth.
Economists said that with July’s figures, third-quarter growth would be on track to exceed the Bank of Canada’s forecast, increasing the likelihood the central bank would not engage in a third rate cut this year.
CIBC, for example, pegs annualized growth for the quarter at 2.7 percent, above the Bank of Canada’s 1.5 percent.
“It suggests that growth in the second quarter is going do pretty well. We’d been looking at 2.5 to 3 percent growth and this is pretty consistent with that for the quarter. It might even suggest we might be on the higher side of that range,” said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets.
The Canadian dollar firmed to a session high on the GDP data.
Figuring prominently in July’s growth was a 4.4 percent rise in oil and gas extraction after a 2.9 percent increase in June. (Additional reporting by Solarina Ho in Toronto; Editing by Jeffrey Benkoe and Meredith Mazzilli)