Canada’s GDP Unchanged in July on Oil Slump: Key Takeaways

(Bloomberg)

Canada’s surging economy took a pause in July, amid slumping oil and automobile production, and as a slowing housing market curbed construction and banking.

Highlights of Canada July GDP Report

GDP was little changed, ending an eight-month stretch of gains for Canada’s economy. Estimates were for a 0.1% increase Oil and gas output was down 1.8%, leading a 0.5% drop for goods producing industries. A 2% gain in wholesale output led gainers. Excluding wholesale, GDP would have been down 0.1%

Key Takeaways

The report shows the economy cooling off in the second half of the year, as most economists anticipated.

Over the past year, Canada’s economy has been running at a pace rarely seen in the past couple of decades, including an annualized 4.5 percent rate in the second quarter. The above potential growth is soaking up all the remaining excess capacity in the economy, prompting the Bank of Canada to raise interest rates twice since July.

Even with very little growth in August and September, Canada’s economy would still probably be poised to grow at a rate of 2 percent or more in the third quarter.

Monthly growth has averaged 0.4 percent in the previous eight months, the best stretch of growth since at least 2010.

Other Details

The figures seem to show the slump in housing has become a drag. Credit intermediation was down 1%, residential construction dropped 0.9% and activity at real estate agents declined 1.5%. The finance and insurance sector’s decline of 0.6% was the fastest since April 2015 Manufacturing dropped 0.4%, the biggest decline since February, led by a 13.5% drop in motor vehicles Services-producing industries were up 0.2%, led by wholesale Overall construction was down 0.5%, the biggest drop this year