Canada’s gross domestic product rose for a fifth straight month in July, the longest expansion streak in two years, on rebounds in manufacturing and retail sales and increased utilities output.
Output rose 0.2 percent to an annualized C$1.29 trillion ($1.31 trillion), Statistics Canada said today in Ottawa, faster than the 0.1 percent gain forecast in a Bloomberg News economist survey with 23 responses. The agency today also reduced its June growth estimate to 0.1 percent from 0.2 percent, and said that output in July expanded 1.9 percent from 12 months earlier.
The report suggests growth for the third quarter may trail the Bank of Canada’s 2 percent forecast and the economy may not reach full output in the second half of next year as the central bank predicts, according to Bank of Montreal economist Robert Kavcic. Governor Mark Carney is the only Group of Seven central banker signaling he may tighten monetary policy, while his colleagues ease.
“It doesn’t look like there’s any one area that screams strength in the Canadian economy” Kavcic said by telephone from Toronto. Growth this quarter will come in at a 1.6 percent annualized pace and the central bank won’t raise interest rates for at least a year, he said.
The Canadian dollar fell 0.2 percent to 98.28 cents per U.S. dollar at 9:47 a.m. in Toronto. Government bond prices rose, pushing the yield on five-year benchmark securities down three basis points to 1.29 percent, the lowest on a closing basis since Aug. 2. Finance Minister Jim Flaherty said yesterday the government would add sales of longer-term debt to take advantage of low borrowing costs.
Manufacturing expanded 0.6 percent in July following a 0.7 percent decline in June, and production from utilities such as electricity plants advanced by 2 percent because of “warmer than usual weather and increased industrial activity,” Statistics Canada said. Retailing gained 0.6 percent led by automobile dealerships, after a 0.1 percent June decline.
The Bank of Canada is relying on business investment and consumer spending to lead growth in what it says is the slowest export recovery since World War II. Canadian shipments abroad are being restrained by a dollar that’s trading at about parity with the U.S. currency, the Bank said in July.
The central bank has kept its key lending rate at 1 percent since September 2010, the longest pause since the 1950s.
The world’s 11th largest economy will have a growth rate of around 2 percent for another year, according to economists surveyed by Bloomberg.
Other Canadian reports this month have shown little pressure for Carney to raise interest rates soon. Consumer prices advanced 1.2 percent in August from a year ago, below the central bank’s 2 percent target, and realtor reports have signaled home price increases are ebbing in major cities where Finance Minister Jim Flaherty had said there were signs of overbuilding.
Today’s report suggested homebuilding may be slowing. Construction declined 0.1 percent in July and the output of real estate agents and brokers fell 1.5 percent.
Mining and oil and gas extraction fell 0.3 percent in July, the third straight decline, led by a drop in crude oil production, Statistics Canada said.
Still, the five consecutive months of growth is the longest since a yearlong streak that ended in August, 2010.