Canada's Economy Stalls in July


Canada’s economy unexpectedly stalled in July as vehicle-related gains by manufacturers and wholesalers were offset by lower utilities and mining output.

Gross domestic product was unchanged during the month, marking the 11th month in the past year where the economy either contracted or didn’t grow.

The report suggests the world’s eighth-largest economy is struggling to emerge from its first recession since 1992, even after the central bank cut its benchmark lending rate to a record 0.25 percent. Bank of Canada Governor Mark Carney said this week that policy makers will maintain their key rate at that level through June 2010 if the inflation outlook remains unchanged.

Canadian Prime Minister Stephen Harper said Sept. 21 that the country is emerging from a recession only in a technical sense,” adding as long as we continue to have challenges in the labor market that affect Canadian families on the ground, then I don’t think we can truly say the recession is over.”

Canada’s jobless rate increased to 8.7 percent in August, the highest since January 1998, as the labor force grew faster than the 27,100 jobs gain recorded for the month, Statistics Canada said Sept. 4.

Output, which shrank at an annual rate of 6.1 percent in the first quarter and 3.4 percent in the second quarter, will expand at a 2.2 percent pace in the third quarter, according to a separate Bloomberg survey.

Manufacturing output rose 0.8 percent in July, reflecting a 17 percent rebound for vehicles and parts manufacturers and a 22 percent gain for non-ferrous metals producers, the agency said. July’s gain in manufacturing brought to 16 percent the contraction of the industry in the past year.

Mining and oil and gas extraction fell 1.5 percent as some facilities temporarily shut down. Mining excluding oil and gas extraction dropped 4.2 percent, the statistics agency said.

Utilities fell 2.4 percent and construction dropped 0.2 percent, the Ottawa-based statistics agency said.

Services-producing industries rose 0.1 percent in the month, led by a 1.6 percent gain in wholesale trade and a 0.6 percent rise in accommodation and food services. Retailing fell 0.1 percent.


TradingEconomics.com, Bloomberg
9/30/2009 9:42:25 AM