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Canada’s economy contracted during 2nd quarter, StatsCan says

Canada’s economy shrank in the second quarter, contracting at an annualized pace of 0.2 percent, Statistics Canada says.

The central bank raised its key interest rate target by a quarter of a percentage point to five per cent in July, saying it remained concerned that progress toward its two per cent inflation target could stalk. Source - Bank of Canada - Banque du Canada. CC SA 2.0.
The central bank raised its key interest rate target by a quarter of a percentage point to five per cent in July, saying it remained concerned that progress toward its two per cent inflation target could stalk. Source - Bank of Canada - Banque du Canada. CC SA 2.0.

Canada’s economy shrank in the second quarter, contracting at an annualized pace of 0.2 percent, Statistics Canada says.

According to CBC Canada News, the decline in the second quarter came about as housing development fell 2.1 percent, posting a fifth consecutive quarterly decrease. New construction dropped 8.2 percent in the quarter, while renovation spending also fell 4.3 percent.

The second-quarter reading was far lower than the Bank of Canada’s (BoC’s) forecast for a 1.5 percent annualized GDP growth as well as the 1.2 percent gain expected by analysts. June’s gross domestic product declined 0.2 percent from May, in line with forecasts, Reuters reports.

Canada’s economy shrank in the second quarter, contracting at an annualized pace of 0.2 percent, Statistics Canada says.

According to CBC Canada News, the decline in the second quarter came about as housing development fell 2.1 percent, posting a fifth consecutive quarterly decrease. New construction dropped 8.2 percent in the quarter, while renovation spending also fell 4.3 percent.

The second-quarter reading was far lower than the Bank of Canada’s (BoC’s) forecast for a 1.5 percent annualized GDP growth as well as the 1.2 percent gain expected by analysts. June’s gross domestic product declined 0.2 percent from May, in line with forecasts, Reuters reports.

“The Canadian economy may already have fallen into a modest recession,” said Stephen Brown, deputy chief North American economist for Capital Economics. The figures “leave little doubt that the Bank of Canada will keep interest rates unchanged next week,” he said.

Today’s GDP report is the last major piece of domestic data before the BoC makes its next policy decision on Wednesday, next week, according to the Financial Post.

Thirty-one of 34 economists polled by Reuters between Aug. 24-30 expect no change to the central bank’s overnight rate at the meeting.

“It becomes easy for the bank to say, ‘monetary policy is continuing to work and it justifies an on-hold stance at this month’s meeting,'” said Andrew Kelvin, chief Canada strategist at TD Securities.

The central bank hiked its benchmark overnight rate to a 22-year-high of 5.0 percent in July, the tenth increase since March of last year. Inflation last year hit a four-decade high of 8.1 percent, four times the central bank’s 2 percent target.” said Stephen Brown, deputy chief North American economist for Capital Economics. The figures “leave little doubt that the Bank of Canada will keep interest rates unchanged next week,” he said.

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We are deeply saddened to announce the passing of our dear friend Karen Graham, who served as Editor-at-Large at Digital Journal. She was 78 years old. Karen's view of what is happening in our world was colored by her love of history and how the past influences events taking place today. Her belief in humankind's part in the care of the planet and our environment has led her to focus on the need for action in dealing with climate change. It was said by Geoffrey C. Ward, "Journalism is merely history's first draft." Everyone who writes about what is happening today is indeed, writing a small part of our history.

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