In July, Canada’s gross domestic product grew by 0.1%, which was better than what was expected, which was a drop. Growth in mining, agriculture, and the oil and gas sectors made up for a drop in manufacturing.
Statistics Canada said on Thursday that the oilsands sector’s contribution to the economy went up by 5.1% during the month. That was a change in direction after two straight months of going down. So far, growth in the second quarter is at 4.2%.
Canada’s economy grew
Growth was led by the agriculture, forestry, fishing, and hunting sectors, which grew by 3.2%. Derek Holt, an economist at Scotiabank, said that Canada had a good year for crop production, unlike the U.S. and Europe, which are both going through droughts.
On the other hand, the manufacturing sector shrank by 0.5%, which is the third time in four months that it has done so. Holt said that Canada’s export market to the US has slowed down, and problems with the global supply chain are still going on. These problems are slowly getting better, which could make the sector look better in the second half of the quarter.
The wholesale trade sector went down by 0.7%, and the retail trade sector went down by 1.9%. Since December, that’s the lowest amount of goods sold in retail.
“This summer, there was a big shift away from spending on goods and toward spending on services,” Holt said. When the pandemic restrictions were lifted, people did things like get haircuts, travel and go to the theatre more often. Retail was not allowed.
Even though the economy grew a little bit in July, an early look at August’s numbers by a data agency shows no growth.
“The economy did better than we thought it would this summer, but it wasn’t anything to write home about,” said Royce Mendes, an economist with Desjardins. “Today’s data beat expectations, but the numbers didn’t move the needle enough for the market to react in a meaningful way.”
Holt said that Canada’s economy is still one of the best in the world, with a growth of 3.6% in the first quarter and 4.2% so far in the second quarter.
Mendes said that he thinks growth will stay below 1% this year. This is half of what the Bank of Canada predicted, which was 2%, and a third of what was seen in the first two quarters.
Holt said, “We’re definitely slowing down, and more of that is on the way as a delayed response to higher interest rates and all the problems in the world economy.” But compared to the rest of the world, Canada has had a good year as a whole.
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