Statistics Canada reports GDP up 0.1% in August boosted by oil and gas subsector
The mining, quarrying and oil and gas extraction sector rose 0.9 per cent, while the oil and gas extraction subsector gained 1.9 per cent
OTTAWA – The energy and financial sectors helped boost Canadian economic growth in August despite weakness in manufacturing due to auto assembly plant shutdowns.
Statistics Canada said Wednesday real gross domestic product edged up 0.1 per cent in August, the seventh consecutive month to see an increase.
Economists had expected no change for the month, according to Thomson Reuters Eikon.
Growth in oil and gas extraction and the finance and insurance sector helped to more than offset declines in 12 of the 20 industrial sectors tracked.
Overall, Statistics Canada says services-producing industries edged up 0.1 per cent, while goods-producing industries were essentially unchanged.
CIBC chief economist Avery Shenfeld called the August figures “a mixed bag” with the strength in the oil and gas sector offset by weakness in manufacturing.
“Canada’s economy had neither tricks nor treats for market observers on this Halloween release, with August’s GDP growth not scary enough to create fears of a slump, but not strong enough for the Bank of Canada to spook investors with a December rate hike,” Shenfeld wrote in a note to clients.
Helping drive the growth was the mining, quarrying and oil and gas extraction sector which rose 0.9 per cent.
The increase was boosted by a 1.9 per cent gain by the oil and gas extraction subsector including a 3.2 per cent increase in non-conventional oil as crude bitumen and total crude production in Alberta reached record levels.
Also climbing higher was the finance and insurance sector which rose 1.0 per cent in August, the largest monthly gain since May 2017.
On the flip side, the manufacturing sector contracted 0.6 per cent in August due in part to shutdowns at some auto assembly plans in the month.
The construction sector also pulled back by 0.4 per cent in the month, while transportation and warehousing slipped down 0.5 per cent.
The GDP report followed the Bank of Canada’s decision last week to raise its key interest rate target by a quarter of a percentage point to 1.75 per cent and signalled rates are headed higher.
Central bank governor Stephen Poloz has said the current rate is still too stimulative for the improved economy and warned it will rise to what the bank considers its neutral range of between 2.5 and 3.5 per cent.