Canada's economy slipped slightly in July, falling 0.1% for the first monthly drop since August, 2009, as reported by Statististics Canada reported on Thursday.
The 0.1% decline in Gross Domestic Product had been expected by analysts and came as expected with decreases in manufacturing, retail and wholesale trade, construction and forestry. Home building and home resales also slid, with consumers buying fewer related goods as well. There were increases in mining, and spotted gains were seen in some financial industries and the public sector.
Economists believe that this weak start to the 3rd quarter suggests a quarter that will find it hard to meet the Bank of Canada forecast for an annualized 2.8% GDP growth. On October 20th, the Bank may revise its growth as well as inflation projections in its Monetary Policy Review. It may maintain its policy overnight rate at 1.0% at the October 19 announcement date, they said.
Manufacturing decreased 0.7% in July after seeing a 1.1% increase in June. Decreases in manufacturing of pharmaceutical and paper products led the 0.9% decline for non-durable goods. Furniture, metallic and non-metallic products led durable goods to a loss of 0.5%. There were increases in the production of food and beverages and motor vehicle parts.
Construction overall fell 0.5% on a 2.0% decline in residential construction, especially for single-family dwellings. The weakness in residential construction and in home resales was mirrored in decreases in furniture, home furnishings and electronics stores and in building and outdoor home supplies stores.
The Canadian consumer, however, continued to buy more cars, more clothing, and more products sold in general merchandise stores (including department stores).
Wholesaling edged down 0.2%, on declines for automotive products, building materials, and personal and household goods. Wholesaling of food and petroleum products increased.
The mining sector rose 1.1% in July after receding 0.5% in June. Finance and insurance edged up 0.1% on increases in personal loans, residential mortgages, and mutual funds sales. Offsetting factors included lower volume of trading on stock exchanges and in insurance activities.
