Canada’s economy shrunk unexpectedly in August, the first contraction since October 2016, despite predictions of 0.1% growth. The contraction was driven by a 1% fall in manufacturing and a 1.4% fall in oil & gas, which is being blamed on maintenance shutdowns by Statistics Canada. While many analysts were predicting that growth would cool following the 4% growth rate in the first half of 2017, the drop was more significant than expected.
"While many analysts were predicting that growth would cool following the 4% growth rate in the first half of 2017, the drop was more significant than expected."
While the Bank of Canada (BOC) has decided to keep rates on hold for now, Douglas Porter, BMO Chief Economist, reflected that the soft reading will reinforce the BOC’s new-found caution, keeping them on hold well into 2018.
