Reporting by Ismail Shakil and Steve Scherer in Ottawa; additional reporting by Dale Smith; editing by Jonathan Oatis
Economy
Canada’s economy stalls in August, seen slipping into recession in Q3
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OTTAWA, Oct 31 (Reuters) – The Canadian economy stalled in August and likely slipped into a shallow recession in the third quarter, data showed on Tuesday, a sign the central bank’s 10 interest rate hikes since last year are weighing on growth.
With the economy stumbling along slower than the Bank of Canada forecast just last week, analysts said there is no need to raise rates again from 5.0%, a 22-year high. The Canadian dollar was trading lower, near its weakest level in a year.
The August result was slightly lower than 0.1% month-over-month rise forecast by analysts polled by Reuters. July GDP was revised to being marginally negative from an initial report of zero growth, Statistics Canada said.
In a flash estimate, the economy was likely also unchanged in September, and Statscan officials said that translated into an annualized 0.1% decline in the third quarter, marking a second consecutive quarter of negative growth after a 0.2% decrease in the previous quarter.
“Whether or not the economy is already in recession is less important than the fact that the lagged impacts of monetary policy are likely to materially depress economic activity moving forward,” said Tiago Figueiredo, an economist at Desjardins, in a note.
“As a result, we expect the economy to more clearly enter a recession in 2024. This data reaffirms our view that the Bank of Canada is done raising rates for this cycle,” Figueiredo said.
The statistics agency said high interest rates, inflation, forest fires and drought conditions hurt growth in August. The central bank has said its previous rate hikes are sinking in.
The projected contraction in third-quarter annualized growth is far lower than the Bank of Canada (BoC) forecast last week. The BoC forecast GDP growth would expand 0.8% in the third quarter, down from 1.5% projected in July.
BoC Governor Tiff Macklem said after last week’s rate decision that there may not be a need for another rate increase if inflation cools in line with the central bank’s expectations.
“Given the fact that Canada has yet to feel the full impact of prior rate hikes, there’s still more downside risk ahead for the economy,” Benjamin Reitzes, macro strategist at BMO Capital Markets, said in a note.
“This is yet one more crystal clear sign that the Bank of Canada should be done hiking,” Reitzes said.
Money markets see a roughly 90% chance the central bank will leave interest rates on hold at its next policy announcement in December, while the Canadian dollar was trading 0.3% lower at 1.3865 to the greenback, or 72.12 U.S. cents.
Canada’s goods-producing sector contracted 0.2%, dragged down by the third consecutive month of declines in the manufacturing sector.
The service-producing sector posted a 0.1% rise, in part helped by the wholesale trade and the transportation and warehousing subsectors.
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TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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