Canadian economy grew by 0.2% in July, falling behind Bank of Canada

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Gross domestic product rose by 0.2 per cent in July and an early estimate of flat growth for August suggests third quarter growth will lag the Bank of Canada’s forecast.

The services-producing sector grew by 0.2 per cent in July, driven by the retail services, finance and public sector industries, according to Statistics Canada data released on Friday. The goods-producing sector grew by 0.1 per cent, driven by manufacturing and utilities. Overall, 13 out of 20 sectors expanded in July.

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Construction contracted for the second month in a row by 0.4 per cent and “was the largest detractor to growth,” as most of its subsectors reported decreases. Transportation and warehousing also declined by 0.4 per cent, due to negative impacts from the wildfires, Statistics Canada said.

An early estimate for August found GDP was unchanged for the month.

The Bank of Canada has said it would like to see growth pick up in the second half of the year, with its current forecast estimating annualized growth of 2.8 per cent for the third quarter.

The bank has made three consecutive cuts to its policy rate since June, with its next interest rate announcement scheduled in October. Inflation fell to two per cent in August, the central bank’s target.

• Email: jgowling@postmedia.com

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