Ottawa — Canada’s economy is likely to recover from a slight contraction in July to August, supported by the growth of the hospitality industry, but depleting droughts will continue to drag important agricultural sectors, data Showed on Friday.
According to Statistics Canada, the Canadian economy shrank 0.1% in July, surpassing analysts’ expectations of a 0.2% decline, but could have grown 0.7% in August due to a surge in services and manufacturing. high. August figures are tentative estimates.
Total economic activity is about 1 percent below pre-pandemic levels due to the expected rise in August, according to Statscan.
“Slightly smaller than expected in July and strong pop in August suggest that the economy has achieved some modest growth throughout the summer quarter,” said Doug Porter, chief economist at BMO Capital Markets. “. ..
The July decline occurred as heat waves struck the agricultural sector and manufacturers were dragged into supply chain predicament, but construction fell for the third straight month.
According to Statscan, this was partially offset by the strong momentum of service as the relaxation of public health measures continued to boost the recovery of hospitality and tourism.
Even if the severe fourth wave of COVID-19 infection weighs heavily on the grasslands of Alberta and Saskatchewan, its service strength is expected to extend beyond August.
Analysts said the Bank of Canada is likely to take another taper in its October 27 interest rate decision, but the rise in August was particularly after the disappointing contraction in the second quarter of the central bank. It is likely not enough to move the interest rate dial.
“I don’t think it’s likely that (the Bank of Canada) will soon follow other central banks in the world to turn hawks,” said Stephen Brown, senior Canadian economist at Capital Economics. rice field.
The Canadian dollar was almost flat at 1.2675 per greenback, or 78.90 US cents.