Canada July GDP Slows More Than Expected On Weak Goods Sector

By Yali N'Diaye

     OTTAWA (MNI) - Canada GDP was unchanged in July after rising 0.3% in June,

the weakest performance since October 2016, slowing more than analysts had

expected due to a 0.5% contraction in goods-producing industries.

     The services sector, on the other hand, continued its consistent expansion

at a steady pace of 0.2%.

     Analysts in a MNI survey had expected GDP to increase 0.1% in July.

     The flat performance brought down the 12-month growth rate to 3.8% from

4.4% in June.

     The Bank of Canada has already factored in a slowdown in teh second half of

this year after a surprisingly strong first half culminating with a 4.5% second

quarter GDP growth that BOC Governor Stephen qualified as "huge".

     Within the goods sector, all major categories were down on the month,

except utilities (+1.7%), which benefited from higher demand for electricity in

Western Canada due to hot and dry weather, the agency said.

     Manufacturing output was down 0.4% in July, its first contraction since

February, led by a 0.9% decrease in durable manufacturing, while non-durable

industries were up 0.3%. Construction declined 0.5%, its largest drop since

October 2016.

     Meanwhile, oil and gas extraction decreased 1.8%, more than offsetting a

0.9% gain in mining, leading to a 1.2% drop in mining, quarrying, and oil and

gas extraction.

     Overall, energy was down 0.8% on the month, the largest decline since

October 2016.

     Excluding energy, GDP edged up 0.1%.

     On the services side, wholesale trade was particularly strong, recording a

2.0% gain on the month, the largest since September 2014, while finance and

insurance was down 0.6%, the largest decline since April 2015.

     Retail trade edged down 0.1%, dragged down by gasoline stations (-3.0%).

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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