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July 2023 GDP: Losing momentum as the resilient economy hits summer challenges.
July 2023 GDP: Losing momentum as the resilient economy hits summer challenges.
Canada’s GDP was flat in July, in line with the advanced estimate, but slightly below market expectations. A challenging summer...
Andrew DiCapua
Canada’s GDP was flat in July, in line with the advanced estimate, but slightly below market expectations. A challenging summer tested Canada’s economy with the port strike and extensive forest fires. While some sectors quickly rebounded from those disruptions, it’s becoming clearer that the manufacturing sector is slowing as recession risks are rising. Overall growth is likely to stall in the third quarter, and our economy’s resilience will be tested in the months ahead.
Andrew DiCapua, Senior Economist, Canadian Chamber of Commerce
KEY TAKEAWAYS
Headlines
- Canada’s real gross domestic product (GDP) was essentially unchanged in July, slightly below market expectations (+0.1%).
- Output grew in 9 of 20 sectors, led by gains in services, which were up 0.1% in July, while goods dropped 0.3%).
Movers and Shakers
- Manufacturing posted its largest decline (-1.5% in July) since April 2021. It’s the second monthly contraction, on lower inventories and shipment blockages in the plastics and rubber products subsector (-8%).
- As expected, the port strike in Western Canada in July had a negative impact on monthly GDP. The transportation and warehousing sector contracted 0.2% in July. Water transportation was most affected as shipments were unable to be processed at the port.
- Forest fires had previously disrupted production in Canada’s energy sector, some of which experienced a bounce back in production in July. Mining, oil and gas rebounded (+1.8%), and accommodation and food services grew 2.3% as RV and camping activities picked up.
OUTLOOK AND IMPLICATIONS
- StatCan’s flash estimate for August sees a modest gain of +0.1%. This would partly improve on the flat-lined July, but the Canadian economy is stalling out, and will likely experience weak, flat or mildly negative growth over the next few quarters. Factoring in rapid population growth, this already feels like a recession for many households and businesses, even if it doesn’t yet meet the technical definition.
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