MNI PREVIEW: Canada's GDP Probably Slowed to +0.1% in July

By Anahita Alinejad

     OTTAWA (MNI) - Canada's economic growth probably slowed again in July,

mirroring expectations the third quarter will be much weaker than the previous

three months.

     Gross domestic product probably expanded 0.1% in July after June's 0.2%

gain according to an MNI economist median. That would be the fourth month in a

row the expansion has slowed from a peak of 0.5% in March. Advance reports on

July GDP components show a drop in manufacturing and a flat reading for retail

volumes, while growth is supported by strong wholesale sales.

     The economy is slowing from the second quarter's 3.7% annualized pace that

was much faster than the Bank of Canada predicted. The BOC forecasts that growth

will slow to a 1.5% pace in the July-to-September period, and policy makers at

their last meeting kept the key interest rate at 1.75% saying the economy was

close to its full potential.

     Some of the strength in the second quarter came from gains in energy

production and exports that appeared temporary, and as consumer spending that

led growth for years faded. Most major economies including Canada's today are

being weakened by global trade tensions that hurt exports and business

investment. The monthly GDP figures for Canada also showed a consistent slowdown

as the second quarter progressed. 

     Not all of growth story points to a major slowdown in the third quarter.

Manufacturing may boost the economy because July's decline was linked to

shutdowns at a major auto factory that was retooling to produce a different

model.

--MNI Ottawa Bureau; +1 613 981-1671; email: anahita.alinejad.ext@marketnews.com

[TOPICS: MACDS$,M$C$$$]