Economy ekes out small gain, but later today Canadians will get the big picture
OTTAWA — So far, the Canadian economy has been performing as expected. It’s the level of growth in the coming months, and years, that remains a big question mark.
Gross domestic product grew by 0.2 per cent in August, Statistics Canada reported today — not great but dead on the target of forecasters.
The only real weak spot in the data was a revision to the July GDP figure, taking the growth estimate down to 0.4 per cent from the federal agency’s previous level of 0.5 per cent.
“Add it up, a slight disappointment in the revision to July, but nothing earth shattering for markets to react to,” said Avery Shenfeld, chief economist at CIBC World Markets.
While the GDP report “provided more evidence that Canada was en route to a hefty third quarter,” Shenfeld noted, “this came after a drop in Q2 that still leaves the year tracking at a mediocre 1.3 per cent 12-month pace.”
Solid gains in wholesale trade and the tourism sector were offset by a small setback in retail trade and finance and insurance, Douglas Porter, chief economist at BMO Capital Markets, said in investment note.
Meanwhile, “the big swing factor in recent months has been the mining and oil and gas group, and it jumped another 1.4 per cent in August for a third consecutive gain,” he said.
The outlook for the economy as a whole will be the prime focus for Finance Minister Bill Morneau as he prepares the annual fiscal budget, likely to be presented in March.
But Canadians will get an advance look later Tuesday when he tables the federal government’s Fall Economic Update in the House of Commons. Along with revised estimates for GDP growth — the first adjustment since the Liberal government presented its first budget in March last year.
That document contained a stimulus-fueled deficit of $29.4 billion for this year, followed by a $29-billion shortfall next year but showed deficit spending tapering off over the government’s five-year forecast horizon.
Enhanced government programs for middle-class Canadians — and some long-term promises for infrastructure programs and increases in pension payouts — support forecasts from many private-sector economists of higher budget shortfalls not lower.
Morneau will deliver the mini-budget today at around 3:20 p.m. ET.