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Canada’s GDP unchanged in July

H.S. Borji
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Canada’s GDP unchanged in July

Canada’s economy was flat in July following six consecutive monthly gains, a sign the world’s eleventh largest economy was facing headwinds at the start of the third quarter.

Canada’s real gross domestic product was essentially unchanged in July, following a 0.3 percent gain the previous month that culminated the strongest quarter of GDP growth since 2011, Statistics Canada reported today in Ottawa. A median estimate of economists called for a monthly growth rate of 0.2 percent.

Compared to May 2013, the economy grew 2.5 percent.

The total value of goods and services produced in Canada in July was valued at more than $1.63 trillion, official data showed.

Manufacturing and the public sector were the major sources of growth in July, StatsCan said. Retail trade, professional services and construction also posted gains.

On the other hand, there were notable declines in natural resources and utilities. Wholesale trade, transportation and warehousing, and entertainment were also down.

The goods-producing industries declined 0.2 percent in July, following a gain of 0.6 percent the previous month. Compared to July 2013, output in the goods-producing industries was up 3 percent.

Manufacturing output grew 1 percent, as durable goods manufacturing increased 1.6 percent. Compared to July 2013, manufacturing output was up 4.7 percent.

All major components of the mining and oil and gas sector declined in July. This sector fell 1.5 percent, following increases of 0.8 percent and 1.3 percent in May and June, respectively. Year-on-year, output in mining and related activities was up 7.2 percent.

Utilities output declined for the fourth consecutive month at a rate of 2.3 percent. Year-on-year, utilities output was down 3.1 percent.

The service economy expanded 0.2 percent in July, following an identical increase the previous month. The gains were led by a more robust public sector. Public sector output increased 0.1 percent in July on the heels of bigger gains in the education sector, which grew 1.5 percent.

The latest figures suggest the Canadian economy hit a roadblock at the start of the third quarter after total output surged in the second quarter on the heels of stronger US demand and a weaker local currency. The US economy grew at an annual rate of 4.6 percent in the second quarter, rebounding sharply from the first quarter slowdown that saw GDP contract 2.1 percent.

In response, Canada’s export sector grew 4.2 percent in the second quarter, following a 0.2 percent decline in the first three months of the year. The United States is Canada’s largest and most influential trade partner and accounts for around three-quarters of Canada’s export market.

Further insights about the export market will be revealed Friday when StatsCan releases August trade figures.

In real GDP terms, Canada’s economy grew 0.8 percent in the April to June period, which translated into an annualized growth rate of 3.1 percent. That was the strongest quarterly gain since the third quarter of 2011.

Second quarter gains were driven by stronger activity in virtually every sector of the economy, as household spending continued to be a major catalyst of growth. Household final consumption expenditure rose 0.9 percent in the second quarter, as consumer spending on goods increased 1.2 percent.

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