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Canadian Output Expanded Less Than Expected in August

Output grew 0.1% in August, missing economist expectations of a 0.2% gain.

Canadian Output Expanded Less Than Expected in August
Pedestrians walk outside Toronto City Hall in Toronto, Ontario, Canada. (Photographer: Brent Lewin/Bloomberg)

(Bloomberg) --

Canada’s economy grew slower than forecast in August after a lull in the prior month, reinforcing the view the nation’s economy is showing signs of decelerating into the second half of the year.

Output grew 0.1% in August, missing economist expectations of a 0.2% gain, Statistics Canada said Thursday in Ottawa. The slight growth in August follows a flat GDP reading in July.

The expansion was broad-based, with 14 of 20 sectors expanding. Manufacturing was the biggest contributor to the monthly expansion, up 0.5%, while wholesale trade was the biggest drag.

The latest GDP reading bolsters the view that Canada is not immune to global weakness and is impacted by overall uncertainty in the economy. It also reinforces the Bank of Canada’s decision on Wednesday to keep rates unchanged for the eighth consecutive meeting, though policy makers signaled they are leaving the door open for a rate cut in December.

Canadian Output Expanded Less Than Expected in August

Key Insights

  • The August GDP result is broadly in line with the idea that Canada’s economy will decelerate in the third quarter from the robust 3.7% growth in the prior period
  • It’s the second print of the quarter and although it surprised to the downside, the result marked the first monthly GDP acceleration since March
  • Wholesale sales, the biggest drag on monthly GDP, dropped 1.3% in August, off-setting growth from the prior month. Declines in the category were broad-based with six of nine subsectors contracting

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  • Goods-producing industries increased 0.2% in August versus a 0.1% gain in services-producing industries
  • The manufacturing sector grew 0.5% on the month after a nearly unchanged reading in July, mainly due to increased sales
  • Professional services continued to grow, up 0.7% on the month and reported the second-largest growth in employment since early 2019; computer systems design and related services led growth in the sector, up 1.3% in August

--With assistance from Erik Hertzberg.

To contact the reporter on this story: Shelly Hagan in Ottawa at shagan9@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Chris Fournier, Stephen Wicary

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