Real gross domestic product (GDP) was up 0.2% in July, following essentially no change in June. Despite negative impacts from wildfires on transportation and warehousing and accommodation services, the services-producing industries grew 0.2% in July, driven in large part by increases in the retail trade sector, the public sector and the finance and insurance sector. Goods-producing industries edged up 0.1%, with the utilities and manufacturing sectors contributing the most to growth within this aggregate. Overall, 13 of 20 sectors expanded in July, reported Statistics Canada on Friday.
“Advance information indicates that real GDP was essentially unchanged in August. Increases in oil and gas extraction and the public sector were offset by decreases in manufacturing and transportation and warehousing. Owing to its preliminary nature, this estimate will be updated on October 31, 2024, with the release of the official GDP by industry data for August,” said the federal agency.
“The retail trade sector (+1.0%) was the largest contributor to overall growth in July, recording a second consecutive increase and the sector’s largest monthly growth rate since January 2023. Most subsectors expanded in July 2024 with motor vehicles and parts dealers (+2.8%) contributing the most to growth, driven by higher retailing activity at new car dealers which more than offset the previous month’s decline. A contraction at gasoline stations (-1.8%) tempered the overall growth in the sector,” it said.
“With the current guidance for flat industry-GDP growth next month, third quarter GDP is tracking just north of 1.0% quarter-on-quarter (q/q) annualized, significantly below the Bank of Canada’s (BoC) 2.8% forecast, but broadly in line with our recent forecast update,” he said.”The BoC next rate decision is in late October and more cuts are certainly on the table. The BoC has shifted their tone as of late, putting more emphasis on their fears around a weakening economy. For what it’s worth, we don’t think today’s data tips the scales any more-or-less in favour of a potential 50 basis point (bps) interest rate cut, which would follow the recent move from the Federal Reserve. Instead, more emphasis will be placed on upcoming labour market data as well as inflation data, where the Bank will be looking for signs that price growth can remain durably at 2%.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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