Canada’s economy showed its first signs of momentum in four months as gross domestic product edged higher in July.
The GDP grew 0.2 percent in July, reversing a 0.1 percent dip in June by goods-producing sectors, which expanded 0.6 percent after three consecutive months of decline. Services grew more slowly at 0.1 percent, with gains in wholesale trade and real estate partially offset by weaker retail activity.
Mining, quarrying, and oil and gas extraction were the single largest drivers of July’s rebound, growing 1.4 percent. Metal ore mining rose 2.6 percent after two months of losses, while oil and gas extraction advanced 0.9 percent. Within that, oil sands output climbed 1.2 percent as operators ramped up production of synthetic crude and bitumen following extensive spring maintenance. The strength of oil and gas was matched by higher exports of crude, bitumen, and natural gas, signalling the global market’s role in Canada’s recovery.
Transportation and warehousing also benefitted, posting a 0.6 percent gain after a 0.7 percent drop in June. Pipeline transportation surged 2.8 percent, while rail rose 1.1 percent.
The manufacturing sector expanded 0.7 percent in July, undoing part of the sharp 1.5 percent decline seen in June. Durable goods production grew 1 percent. Motor vehicle and parts manufacturing saw double-digit gains in parts and a 9.1 percent lift in vehicle output.
On the non-durable side, chemical production climbed 4.8 percent. Pharmaceuticals rose more than 12 percent, recouping much of the sector’s June setback.
Real estate and leasing grew 0.3 percent, hitting a second consecutive record high. Resale activity increased in large urban centres in Ontario and British Columbia, driving up demand for legal services related to property transactions. Wholesale trade also added 0.6 percent, with auto and lumber-related wholesalers fuelling the increase.
Retail trade, however, was a drag on the overall numbers. The sector contracted by 1 percent, with declines in supermarkets, clothing outlets, and sporting goods stores outweighing gains by online and non-store retailers. Food and beverage outlets, which had driven growth in June, slumped 2 percent in July.
The question heading into the fall is whether the gains in resources and manufacturing can hold against those headwinds.