Economy shrank in August

OTTAWA—Canada’s economy shrank 0.3 percent in August in what is widely seen as the first in a dismaying series of monthly pullbacks that could amount to a recession.
The drop, generally in line with projections, largely was due to declines in wholesale trade, manufacturing, and the mining and oil and gas industries.

Those are the same sectors that had powered hefty 0.7 percent growth in gross domestic in July.
“This result simply unwinds part of July’s surprising strength, and would normally be seen as no big deal,” BMO Capital Markets economist Douglas Porter commented following today’s data release.
“However, given the marked deterioration in the economic outlook since that time, it unfortunately will look like a loud early warning shot.”
In addition to the factory and energy sectors, there were declines in construction as well as in rail and truck transportation, Statistics Canada said.
The report on August GDP “is a bit of ancient history, since it precedes the intense financial turmoil which erupted in mid-September,” Porter noted.
“We expect that the decline in August will cascade into the fourth quarter and likely into the first half of next year,” he warned.
TD Bank’s Pascal Gauthier was similarly downbeat.
“Looking ahead, the Canadian economy is expected to experience a recession in the coming quarters,” Gauthier said.