Canadian economy grew 3.3% in Q2 but early signs point to July contraction – National

Leonardo Rasaki

The Canadian economy grew at an annual rate of 3.3 per cent in the second quarter, bringing the quarterly reading below estimates and an early look at July suggests a contraction.

Statistics Canada released its latest reports on monthly and quarterly real gross domestic product on Wednesday morning, which showed the economy expanded for a fourth consecutive quarter, driven by increased businesses and household spending.

Read more:

Busy gas stations, car dealers pushed retail sales up in June: Statistics Canada

According to the federal agency, real GDP grew by 0.8 per cent in the second quarter, with the economy staying flat in May before seeing growth of 0.1 per cent in June.

An early reading for July points to a contraction of 0.1 per cent.

Growth in the second quarter is down from the agency’s preliminary estimate of 4.6 per cent annualized growth.

Story continues below advertisement


Click to play video: 'U.S. economy is not in a recession right now: Powell'







U.S. economy is not in a recession right now: Powell


U.S. economy is not in a recession right now: Powell – Jul 27, 2022

For comparison, the economy grew at an annual rate of 3.1 per cent in the first quarter of this year.

Wednesday’s report said businesses ramped up their investments in inventories, which served as the major contributor to growth. Businesses also increased their investments in engineering structures and machinery and equipment.

Meanwhile, household spending on semi-durable goods increased, with the rise driven by an increase in spending on clothing and footwear as more people headed back to the office.

At the same time, housing investment declined in the second quarter along with household spending on durable goods.

Wages were up two per cent in the second quarter, with Ontario and Alberta contributing the most to the national increase. Statistics Canada said the Atlantic provinces’ wage growth for the quarter were almost double the national rate.

Story continues below advertisement

Read more:

Ottawa posts a surplus of $10.2B in 1st quarter of fiscal year

While disposable income rose for households, their savings rate declined from 9.5 per cent in the first quarter to 6.2 per cent, largely due to inflation. However, the savings rate remains well above pre-pandemic levels, which was 2.7 per cent at the end of 2019. While the report provides the aggregate savings rate, Statistics Canada noted that savings rates tend to be higher among those in higher income brackets.

“Although these estimates suggest ongoing resiliency in household net savings, inflationary pressures on consumption and trends in employee compensation will likely be key determinants of future outcomes,” the agency said in its report.

The Bank of Canada has called the Canadian economy “overheated” and has been combatting high inflation with a series of interest rate hikes.

The central bank is hoping higher borrowing rates will slow down economic activity and bring inflation back to its target of two per cent.

With the annual inflation rate reaching 7.6 per cent in July, the Bank of Canada is expected to announce another supersized interest rate hike Sept. 7.


Click to play video: 'Tip inflation: Why Canadians are tipping more than ever'







Tip inflation: Why Canadians are tipping more than ever


Tip inflation: Why Canadians are tipping more than ever

© 2022 The Canadian Press

Next Post

Viant’s Latest Ad Is a CG Sensation Showcasing a New Digital Landscape

Creative studio Aggressive and ad agency Piro deliver CG sensation showcasing a new digital landscape for an upcoming marketing campaign by Viant. The film blends futuristic CG with live action to build a vision for the ‘New Open Web,’ the connected media landscape of the future that’s here today. Set […]