Canada’s economic output came in flat in July, coming in below market expectations of a rise of 0.1 percent sequentially. Out of 20 major industry groupings, only 12 recorded rising output. Goods producing industries led the fall. Mining, quarrying and oil and gas activity pulled back markedly on widespread softness, made worse by a facility shutdown in Newfoundland and Labrador.
Construction activity also dropped in the month, falling 0.7 percent, as a gain in single detached home activity was countered by contractions elsewhere. Manufacturing dropped 0.1 percent, as inventory buildups countered the previously-reported sales decline. Meanwhile, service producers saw a brighter picture, recording a rise of 0.3 percent, with wholesale trade, professional services and real estate leading the way. The headline was definitely soft, but the underlying story was not.
“We still look for a step-down in the pace of growth in the third quarter, but with better details. We continue to track a bit north of 1.0% annualized growth. This data is likely to leave the Bank of Canada happy with their current wait-and-see approach. Governor Poloz and company are looking for signs of the global trade and manufacturing slowdown manifesting in the Canadian data. For now, the waiting game continues”, said TD Economics in a research report.
