The Canadian economy performed worse than expected in August and was little changed in September, as continued supply chain disruptions continue to hamper strengthening economic growth.
According to data released Friday by Statistics Canada, GDP grew only 0.4% in August, largely due to increases in service-producing industries which rose 0.6%, offsetting a decline of 0.1% in goods-producing industries. Although 15 of the 20 industrial sectors recorded growth in August, the overall GDP gain was still lower than the 0.7% growth forecast by economists polled by Bloomberg.
To make matters worse, preliminary estimates for September suggest that economic activity has not improved from the dismal August reading and remained essentially unchanged at 0.5%. Although there has been a significant increase in the mining, quarrying, and oil and gas extraction sector, driven by a surge in global energy prices last month, this did not was not enough to offset the substantial decline in manufacturing and retailing.
Looking more closely at the numbers, the accommodation and food services industry grew 7% in August, marking a continuous increase since the plunge at the start of the pandemic. Likewise, the retail trade sector also rose 1.8% in August, following a 0.6% decline in the previous month. The Canadian manufacturing sector rose 0.5%, while transportation and warehousing also continued to post gains for the third consecutive month, up 1.2%.
On the contrary, the dry heat wave that persisted for much of the summer in Western Canada caused the agriculture, forestry, fishing and hunting sector to drop 5.7%. , after declining 5.5% in July. All subsectors of this industry were down, with crop production falling 10.9% in August, bringing activity to its lowest level since 2003.
The latest figures paint a troubling picture for the Bank of Canada, which said on Wednesday it would withdraw its government bond purchases while preparing to raise interest rates ahead of its previous maturity. The sudden pivot to a more hawkish stance on the part of the central bank comes as supply chain disruptions continue to hamper economic growth while fueling soaring inflation. As a result of Statistics Canada’s report, the Canadian dollar has fallen to $ 1.239 per US dollar at the time of writing.
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