The Canadian economy showed better-than-expected growth in June with a 0.2% increase in GDP and 17 of the 20 main sectors gaining.
Figures from Statistics Canada show that manufacturing was weaker than in May (down 0.2% and offsetting the previous month’s gains) while services-producing industries gained 0.3%.
The construction sector posted its third gain in four months (up 0.7% in June) with single unit construction and home alterations and improvements rising 1.2%, non-residential construction up 1%, and repair construction up 0.4%. Engineering and other construction was down 0.4%.
Housing resale market activity in Ontario and Quebec boosted GDP at real estate agent offices by 0.7%.
Second quarter gains
June’s increase built on a strong quarter for the economy.
Goods producing industries increased 1.1% in the second quarter, following declines in the three previous quarters. Services-producing industries were up 0.8%, the largest increase since the second quarter of 2017. Overall, gains were observed in 16 of 20 industrial sectors.
The Conference Board of Canada noted that real GDP grew by 3.7% at annual rates in the second quarter. The strong growth was higher than most economists expected and suggests the economy has picked up after two quarters of very weak growth.
Exports drove the increase, although global trade concerns make it unlikely this will endure; while consumer spending eased as higher interest rates and household debt saw families cut back on durables and car purchases.
“GDP growth soared past most projections in the second quarter. After two quarters of sluggish growth this suggests the economy is performing significantly better in the second half of this year,” said the Conference Board of Canada’s Director of Economics Matthew Stewart. “However, weak business investment and a deepening US–China trade war could easily derail growth and are likely to keep the Bank of Canada from increasing rates when they meet next Wednesday.”
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