MNI BRIEF: Canada July GDP Seen Down Less Than Govt Flash

Canada on Friday will likely report that July GDP shrank 0.2% according to a market consensus, a decline half as much as the government statistics office's flash estimate, on resilience in the job market and retailing.

Statistics Canada's flash estimate for July showed a 0.4% contraction based in part on an earlier flash showing retail sales fell 1.7%, and since then the official figure has come in at a 0.6% decline. Economists at Bank of Montreal and Desjardins also point to the rise in hours worked in July, a sign of some momentum in output.

With the economy opening further in August, a milder GDP decline for July suggests less risk of stunning weakness for Q3 GDP growth, including the Bank of Canada's estimate of 7.3% annualized. Royal Bank economists said August GDP could come in with a flash estimate of a 0.7% increase that would put Q3 GDP at a 4.5% pace, while BMO sees 3.5%.