Canadian economy expanded a modest 0.1 percent in August

The Canadian economy expanded a modest 0.1 percent in August, representing the third straight month of growth after a five month period of contraction.

According to Statistics Canada, mining, quarrying, manufacturing, retail trade, and oil and gas extraction all posted growth.

Even though oil prices have plunged over 60 percent from their peak in 2014, the country’s oil sector continued to expand, with output up 0.5 percent compared to last year.

GDP rose 0.1 percent in August, in line with what analysts had forecast, but behind the 0.3 percent increase in July and 0.4 percent rise in June.

Two sectors that dragged on growth were finance and insurance and wholesale trade, down 0.5 percent. The arts, entertainment and recreation sector declined, in addition to the information technology, accommodation and food services, and public administration sectors.

On an annualized basis the economy grew 0.9 percent between August last year and this past August.

The Canadian economy is on track for third quarter growth of an annualized 2.5 percent, which would be the strongest of the year so far.

Canadian Imperial Bank of Commerce economist Andrew Grantham said in a research report:

“After the lows earlier in the year and highs of the June-July rebound, it was back to reality for the Canadian economy in August. And given the lingering effects of the oil price shock in some areas of the country, that reality appears to be one of very modest growth,”

Mr Grantham added:

“Currency depreciations have the greatest impact on the economy with a three- to six-quarter lag,” he said. “We would expect that non-energy exports, and in particular the manufacturing sector, will continue to be a strong contributor to growth in the latter part of 2015 and 2016.”