Canada’s economy grows for third month but sluggishness persists

Canada’s economy grew for a third straight month in August, but at a much slower pace foreshadowing of a more sluggish growth in the future.

Manufacturing, mining, quarrying, and oil and gas extraction and retail trade all expanded, Statistics Canada reported Friday. Over all, eight of 11 major industry segments posted gains.

The data agency reported that the GDP adjusted for inflation rose by 0.1 per cent in August, following growth of 0.3 per cent in July and 0.4 per cent in June.

“Though growth is muted, there is fairly broad breadth to the gains with only two sectors meaningfully dragging on growth,” Scotiabank said.

Weak link

It singled out finance and insurance and wholesale trade for much of the weakness affecting Canada’s economy.

Economists predict the August growth keeps the economy on track for third-quarter expansion of about an annualized 2.5-per-cent pace, which would be the strongest quarter in a year.
But while that represents a solid rebound from the economic contraction of the first half of the year, experts suggested that August’s relatively slow growth may be more like what Canadians should expect in the fourth quarter and into 2016, as the aftershocks from the oil slump persist.

“After the lows earlier in the year and highs of the June-July rebound, it was back to reality for the Canadian economy in August,” Canadian Imperial Bank of Commerce economist Andrew Grantham said in a research report. “And given the lingering effects of the oil price shock in some areas of the country, that reality appears to be one of very modest growth.”