Statistics Canada’s gross domestic product report on Wednesday said retail and wholesale trade as well as the oil and gas sector weighed on growth.
However, it highlighted the Trans Mountain pipeline expansion’s contribution to economic growth that month.
“The crude oil and other pipeline transportation industry rose 1.5%, reflecting in part commencement of the expanded Trans Mountain pipeline as the first tankers carrying Western Canadian oil departed from the Port of Vancouver in late May,” the report says.
Economists noted while the latest data came in slightly stronger than expected, it reaffirms the fact that economic growth is tepid, warranting a continued reduction in interest rates from the Bank of Canada.
The federal agency estimates that growth was tempered slightly in June to 0.1%, with growth in construction, real estate and rental and leasing, and finance and insurance partially offset by decreases in manufacturing and wholesale trade.
What is GDP?
Gross domestic product (GDP) is a statistic economists use to measure the total amount of goods and services produced in a country during a specific time period, usually a quarter or a year. This number is calculated in one of three ways.
Read the full definition in the MoneySense Glossary: What is GDP?
GDP growth higher than predicted
For the second quarter, Statistics Canada expects real gross domestic product grew at an annualized rate of 2.2%.
“Canada’s economy did marginally better than we expected in the closing months of the second quarter, while not registering a medal-winning performance when judged in terms of per capita output gains,” wrote CIBC chief economist Avery Shenfeld.
“The data will likely see some small upward adjustments to forecasts for Q2 GDP, but not enough to stand in the way of a further BoC rate cut in September, which is more tied to the progress seen in inflation readings.”
