Toronto/CMEDIA: Against widespread expectations, Canada’s economy shrank in August with no growth, Statistics Canada data showed on Friday.
Canada’s economy might escape a recession in the third quarter, according to the advanced estimates.
Following an upwardly revised report of 0.3 percent growth in the previous month, Canada’s economy shrank by 0.3 percent in Aug, Statistics Canada said, which effectively offsets any growth so far in the current quarter.
Led by a drop in output from both the services and goods sector, this was the fourth monthly contraction in five months, said Statistics Canada.
The monthly GDP would likely expand by 0.1 percent in Sept, an advance indicator suggested that would take the total annualized growth of the third quarter to 0.4 percent, missing Bank of Canada’s forecast.
The advance estimate is not always accurate and is Subject to change.
While the annualized quarterly estimate is based on industrial output, StatsCan will publish the annualized quarterly GDP based on income and expenditure.
A likely growth in the third quarter, which is hinged on the economy boosting its output in Sep means Canada could avoid a recession in Q3.
Two quarterly contractions in a row is considered a recession.
Tariffs continue to hammer the economy
The impact of tariffs on steel, cars, lumber and aluminum and general trade uncertainty reduced exports and hurt growth causing Canada’s GDP to shrink in the second quarter by 1.6 percent.
The third quarter annualized GDP was likely to be 0.5 percent, The Bank of Canada said this week.
Hardest hit due to U.S. tariffs, the manufacturing sector accounts for almost a tenth of the GDP, contracted by 0.5 percent in August, data from the statistical agency showed.
Primarily due to a 1.2 percent drop in metal ore mining and a five percent drop in coal mining, Statistics Canada said that sectors such as mining, quarrying and oil and gas extraction experienced the biggest drop by contracting by 0.7 percent.
Among the the main contractions in the services sector were in transportation and warehousing, in part because of an airline strike, as well as wholesale trade.
In Spite of some of the drop in the services sector, growth in retail trade and real estate and rental and leasing helped the offset.
