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Canadian economy grows slightly in July

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Canadian economic activity edged up a surprise 0.1 per cent in July, driven by strong production in the oilsands, while gross domestic product was most likely flat in August, Statistics Canada data showed on Thursday.

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Analysts polled by Reuters had forecast GDP would fall 0.1 per cent in July from June. Statistics Canada said growth in goods-producing industries more than offset the first decline in services-producing industries since January.

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Oilsands extraction jumped 5.1 per cent in July on higher output, partially offsetting two months of declines. Canada’s agricultural sector also helped drive economic growth, with crop production up 7.2 per cent, mainly on volumes of wheat and other grains.

Demand for Canadian wheat has increased since Russia’s invasion of Ukraine, which Russia calls a special military operation, helping push up export volumes.

The retail trade sector contracted sharply in July, falling to its lowest level since December 2021, led down by a 7.1 per cent decline in output at gasoline stations, Statistics Canada said.

  1. The OECD expects the Bank of Canada to raise its policy interest rate to 4.5 per cent in 2023.

    OECD predicts Bank of Canada will hike interest rate to 4.5% in 2023

  2. High inflation is just one of the challenges facing the economy.

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Still, the decline in retail trade most likely reversed in August, Statistics Canada noted in its flash estimate.

Accommodation and food services also contracted in July, again the first decline since January, driven by less activity at bars and restaurants.

The Canadian dollar was trading 0.7 per cent lower at $1.3695 to the greenback, or 73.02 U.S. cents, giving back much of its previous day’s gains.

© Thomson Reuters 2022

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