Canada’s gross domestic product gained for a third month in August on higher oil production, suggesting that global market turmoil during the month didn’t derail the world’s 10th largest economy.
Real GDP rose 0.3 percent on a seasonally adjusted basis, Statistics Canada said today in Ottawa. Economists expected a 0.2 percent gain, according to the median estimate in a Bloomberg survey with 24 responses. The agency also raised its July growth estimate to 0.4 percent from an initially reported 0.3 percent.
The data add to evidence that growth resumed in the third quarter after shrinking in the April-to-June period, when wet weather slowed work on energy projects in western Canada and Japan’s earthquake and tsunami disrupted automobile production. The report is unlikely to prompt changes to Bank of Canada interest rates though, as policy makers gauge the longer-term impact of a deepening of Europe’s debt crisis and concerns about U.S. growth, said Royal Bank of Canada’s Paul Ferley.
The data “is probably not going to result in any shift in policy,” said Ferley, assistant chief economist at Royal Bank in Toronto, by telephone. The central bank will “probably take some comfort you’ve got more momentum in the economy to withstand the headwinds, especially if they intensify,” he said.
The Canadian currency, which had a fourth weekly advance last week on optimism Europe’s leaders will manage to contain the region’s crisis, outperformed a majority of its most-traded peers today. It fell 0.6 percent to 99.78 cents per U.S. dollar at 4:05 a.m. in Toronto.
Today’s GDP data suggest a 2.8 percent annualized expansion in the third quarter, Ferley said. The Bank of Canada cut its growth forecasts last week through the middle of 2012, projecting annualized growth of 2 percent in the third quarter and 0.8 percent in the final three months of this year.
The central bank’s fourth quarter forecast looks “very weak to me,” Ferley said.
Statistics Canada said energy output gained 2.8 percent in August, the third straight rise, as the industry rebounded from an earlier decline that resulted from poor weather conditions in western Canada. Spring breakup, when wet weather prevents rigs from working in marshy western Canadian fields, lasted longer than usual this year because of late snowfall. Wildfires also swept across northern Alberta, the biggest energy-producing province.
The picture was mixed in other industries with Canada’s inflation-adjusted output excluding energy unchanged in August, the statistics agency said.
The finance and insurance sector rose 1.4 percent in August, partly due to higher stock trading volume, the agency said. Other industries recording gains were construction and retail trade.
Manufacturing fell 0.4 percent and output of utilities was down 0.8 percent during the month. Wholesale trade recorded a 1.4 percent decrease.
“While sporting a snappy headline, underlying GDP growth was much less impressive,” Doug Porter, deputy chief economist at BMO Capital Markets in Toronto, said in a note to investors. “Much as the Q2 decline for GDP was largely driven by special factors, so, too, was the Q3 rebound.”
Finance Minister Jim Flaherty said today’s data are consistent with the government’s expectations of “modest” growth for the nation’s economy.
“The GDP figures were a little bit better than the market expected, but it’s still 0.3% for the month of August, so this is reflective of modest growth, which is what we have anticipated and which we expect to continue,” Flaherty told reporters in Trenton, Ontario.
Gross domestic product grew 2.4 percent in August from the same month a year earlier, Statistics Canada said, the same as July’s revised pace.
In a separate report, the agency said the industrial product price index rose 0.4 percent in September from August, faster than the 0.2 percent median estimate in a Bloomberg survey of 13 economists.
The raw-materials price index increased 1.4 percent in September on higher prices for crude oil. The gain was larger than all forecasts in a Bloomberg survey of 11 economists that had a median estimate of a 1.9 percent decrease.
Over the 12 months ending in September, industrial prices rose 5.3 percent while raw-materials costs jumped 15.2 percent, suggesting factory profit margins have been shrinking.