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Canada: Real GDP Shrank 0.1% In August

By The National Bank of CanadaMarket OverviewNov 06, 2012 07:18AM ET
Canada: Real GDP Shrank 0.1% In August
By The National Bank of Canada   |  Nov 06, 2012 07:18AM ET
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Canada – In August, real GDP shrank 0.1%. Weakness was relatively broad based with only eight of the 19 sectors showing gains–the worst such ratio since the last recession. Goods production fell sharply (-0.5%) after increasing 0.2% the month before. Among the goodsproducing sectors, utilities (-0.8%), mining and oil and gas extraction (-0.7%) and manufacturing (-0.6%) were the worst performers.

Temporary shutdowns contributed to the weakness in mining. Agriculture (+0.7%) provided some offset. Industrial production contracted 0.7% after swelling 0.3% the previous month. Durable goods manufacturing decreased (-1.3%) while production of nondurable goods (+0.3%) rose in the month. Among the service-producing sectors, wholesale trade (+1.0%) was the top performer while retail trade lagged behind (-0.5%). Overall, the service sector was flat in the month.
Contribution to change in August GDP
Contribution to change in August GDP

Based on the first two months of data, GDP growth is tracking at an annualized 0.6% in 2012Q3. September’s reading needs to be strong if GDP is to top the BoC’s October MPR projection of 1.0% for the quarter.

The Canadian job report was weaker than expected in October with a gain of only 1.8K. This comes on the heels of a 52.1K surge the previous month. Full-time jobs were up 7.3K while part-time jobs decreased 5.5K. Employment in the goods-producing sector was down 19.3K following a large gain in September (34.5K). Within this sector, construction was the top performer (+3.5K) while agriculture brought up the rear (-12.7K).

The service producing sector posted a gain of 21.0K after advancing 17.6K the month before. In this sector, educational services (+16.2K) were the top performer while accommodation and food services (-17.1K) were the worst. Five provinces saw employment progress. Quebec recorded the largest gain (+20.1K) while British Columbia (-10.9K) and Ontario (-9.9K) were at the back of the pack. The national unemployment rate remained unchanged at 7.4%.
Canadian job report weaker than expected
Canadian job report weaker than expected

Private-sector employment registered a fourth decline in six months (-21k). Looking forward, with TSX-listed corporate earnings down 30% so far in Q3, we do not expect a hiring spree in the private sector anytime soon. Instead, labour market conditions are likely to remain difficult in the coming months.

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Canada: Real GDP Shrank 0.1% In August

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Canada: Real GDP Shrank 0.1% In August

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