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--5 Things To Look For In Canada July GDP
By Yali N'Diaye
     OTTAWA (MNI) - Statistics Canada will release the July GDP data Friday
morning. Ahead of the release, we highlight five themes for particular
     - Analysts in a MNI survey expect July GDP to edge up 0.1%. Forecasts range
from -0.1% to +0.2%, with the extent of the oil production drag being the wild
card. GDP was flat in June, handing off a soft start to the third quarter
following a 0.5% growth expansion in May. A 0.5% gain in hours worked during the
month still points to a positive reading.
     - The oil sector was affected by a power outage in June at Syncrude
Canada's oil sands, but Suncor Energy said the facility was not expected to
return to full production until September. The extent of the impact of this
disruption will likely determine the pace of GDP growth in July. However, the
BOC has already signaled that the disruption in the oil sector was a temporary
factor it is likely to look through. Such factors "will likely weigh on growth
in the third quarter, but do not point to weaker underlying momentum," BOC
Senior Deputy Governor Carolyn Wilkins said in her economic progress report
speech on Sept. 6. Therefore, it will be particularly important to look at GDP
excluding energy on Friday.
     - Housing will have a mixed contribution in July based on monthly data.
July marked the third consecutive increase in existing home sales (+3.0%),
supporting the scenario of a stabilization after a weak start to 2018. On the
other hand, housing starts fell to a seasonally adjusted annual rate of 205,751
in July from 245,169 in June, a 16.1% drop pointing to weaker construction
activity. During the month, construction employment fell: by 2,200 according to
the payrolls survey and by 12,300 according to the household survey.
     - Manufacturing is expected to provide a strong offset to the expected
weakness in the energy sector, as sales volumes rose 1.0% on the month despite
the tariffs imposed both by Canada and the U.S. on their respective imports of
aluminum and steel.
     - With construction likely down, and manufacturing offsetting energy to an
unknown extent, that leaves the services sector with the heavy lifting to do in
July. A 1.2% increase in real wholesale sales is likely to provide support,
while retail sales volumes edged down 0.1%. 
--MNI Ottawa Bureau; +1 613 869-0916; email:
[TOPICS: M$C$$$]