By Sumayya
Canada’s economic growth stopped for the second month in a row in August, and a drop could be coming in September, information shared on Friday by Statistics Canada showed.
The real gross domestic product—which measures the total value of everything made and done in the country—was basically unchanged for the month, following almost no growth the month before, in July.
Money experts asked by the Reuters news agency before the information came out had predicted a 0.2 percent growth for August.
Wholesale trade—where businesses buy goods in large amounts to sell to others—and the government job sector were problem areas. Wholesale trade dropped by 1.4 percent in August as most smaller parts of that business shrank. Businesses that sell cars and car parts to other businesses shrank for the first time in seven months, Statistics Canada said, because car manufacturing dropped and fewer passenger cars were brought into the country from abroad.
Government sector activity—including work in fields like school services, health care, and social help—dropped as well. Work done by the government’s public administration office also caused most of the drop, as work on the 2026 census finished up. The sector for mining, digging, and oil and gas stayed flat, because higher mining and digging activity was balanced out by a drop in oil and gas creation due to repair work at some locations.
Store shopping trade was among the good areas in the month, showing a 1.2 percent growth and doing more than enough to fix a drop that happened in July.
Manufacturing rose for the fifth time in seven months; the transport and storage industry also saw improvements in August, and the finance and insurance sector grew too.
Statistics Canada’s early guesses for September hint that real gross domestic product dropped 0.1 percent, partly because of losses in manufacturing as well as mining, digging, and oil and gas extraction.
That slow speed in September, combined with no growth in July and August, shows a pattern of weakness in recent months, according to BMO top economist Doug Porter.
“So much for the forward movement that seemed to be growing during the spring months, which the Bank of Canada talked about a lot as proof of the economy’s strength,” Porter said in a note, pointing to the economic activity mentioned when the central bank increased interest rates earlier this week.
Porter says some of the weakness might seem bigger than it really is because of the drop related to the census, which was a one-time event. But with the continuing trade war and dropping job numbers in recent months, Porter says there are clear reasons why the economy would be having a hard time growing.
Even with no growth in July and August and signs of a drop in September, the agency’s quick guesses still see the real gross domestic product growing by 1.3 percent on a yearly basis in the third part of the year—a slowdown from the 3.3 percent growth seen in the second part of the year.
But that is lower than the two percent growth that the Bank of Canada was predicting for the third part of the year in its money policy report shared on Wednesday. CIBC expert Andrew Grantham said that while the bank was already predicting some slowing in the final part of the year 2026, today’s information shows that economic movement going into that final period might be even weaker than people thought.
“To be fair, there is a lot more information to be shared between now and the December meeting,” Grantham wrote in a note to investors. “But today’s release supports the idea of the bank staying still for now on another interest rate increase.”
The central bank increased its main borrowing rate at its meeting this week by a quarter of a point, taking it to 2.5 percent. While some money experts predict it could be the start of a series of back-to-back rate increases, others say the bank might leave rates at 2.5 percent while waiting to see if more changes are needed.
