Canadian economy down 0.1% in July, up 0.7% in August

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Band Julie Gordon

OTTAWA, October 1 (Reuters)The Canadian economy edged down in July due to declines in agriculture, manufacturing and construction, but is expected to rebound strongly in August, bringing overall economic activity closer to pre-pandemic levels, released data shows Friday.

The Canadian economy contracted 0.1% in July, narrowly beating analysts’ estimates of a 0.2% decline, but likely increased 0.7% in August thanks to increases in services and manufacturing, according to Statistics Canada. The August number is a preliminary estimate.

With the expected rise in August, total economic activity is about 1% lower than pre-pandemic levels.

July’s drop came as a heat wave hit the agricultural sector and construction activity declined, as manufacturers were dragged down by supply chain issues. This was partially offset by strong momentum in services, Statscan said.

“As restaurants and bars were rocking again… other sectors of the economy were sagging,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

The canadian dollar CAD = weakened 0.1% to 1.2687 per greenback, or 78.82 cents US.

(Report by Julie Gordon in Ottawa, edited by Timothy Heritage and Giles Elgood)

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