Canadian real GDP contracted by 0.3 per cent in August after increasing by 0.3 per cent in July. Goods-producing sectors fell by 0.6 per cent, while service-producing industries decreased by 0.1 per cent. Detractors from growth were led by utilities (-2.3 per cent), transportation and warehousing (-1.7 per cent), wholesale trade (-1.2 per cent), and mining, quarrying, and oil and gas extraction (-0.7 per cent). Conversely, retail trade was the largest driver of growth in August (0.9 per cent), while all goods-producing industries either remained flat or contracted from the previous month. Output for the offices of real-estate agents and brokers rose by 0.3 per cent month-over-month. Preliminary estimates suggest that real GDP by industry increased by 0.1 per cent in September, contributing to an advanced estimate of 0.4 per cent growth for the third quarter on an annualized basis.

The Canadian economy gave back much of the growth found in July, with August’s data contributing to a weak year of economic activity in Canada. Following two consecutive rate cuts, the Bank of Canada will be monitoring next month’s quarterly GDP results to assess how the economy is performing relative to their updated projections. If the economy underperformed in the third quarter, we could expect one final rate cut from the Bank before year-close to address underlying weaknesses in the economy and labour market.

Copyright British Columbia Real Estate Association. Reprinted with permission.