Today’s release of 0.2% growth in real GDP for the month of July from Statistics Canada did little to shift the landscape. This growth is welcome, although small, news for the Canadian economy. Goods-producing industries led the way in the growth which was strong. Most notably to the mining, quarrying, and oil and gas extraction supersector which had a stellar 1.4% growth.
The details of the mining and quarrying sector showed the big 2.6% jump in July. The entire mining sector — except oil and gas — is important in leading this growth. Its particularly strong performance has large positive effects on other elements of the economic output. The oil and gas extraction subsector experienced an increase at 0.9%. Incredibly, this growth has occurred despite it being an extremely uncommon area of economic expansion.
In addition to mining and extraction, the manufacturing sector played a crucial role in driving economic growth, increasing by 0.7% during the same period. Durable goods manufacturing continued to be the strongest performer with a robust, if not completely accelerating, growth of 1.0%. Meanwhile, non-durable goods manufacturing saw a much smaller increase of just 0.4%. These numbers imply a relatively even growth across manufacturing activities, consistent with a healthy economy.
Driven almost entirely by services, the services-producing industries increased just 0.1%, showing a marked lack of growth relative to the rapid acceleration seen in the goods-producing industries. Most promising was a 0.6% increase in the transportation and warehousing sector, pointing to this soft, but positive, upward tick in services.
While the growth in July is encouraging, it wasn’t rosy across all sectors. The retail trade sector has been hit hard – down 1.0%. This unexpectedly large drop raises new clouds on consumer spending and overall market dynamics and warrants deeper analysis.
Goods-producing industries had a total increase of 0.6% in July. Her performance reflects their critical role in the economy’s post-rebuilding growing pains during this time. This sector’s surprising strength anchored the overall GDP figure and points to continuing strength in a mixed and uneven economy.
Looking forward, Statistics Canada has already given an advance estimate for August. Their estimates imply that real GDP for that month was flat, very close to zero, but not negative. This projection suggests some degree of stabilization in economic activities after the robust growth recorded in July.
