Economy continues to grow in July, fueled by strong manufacturing numbers

Canada’s economy continues to defy adverse global conditions and the guarded expectations of experts, posting a 0.2 per cent advance in July that got the third quarter off to an encouraging start.

 The expansion was double consensus estimates – some economists had thought a negative number was possible – although the shine was dulled somewhat by a downward revision for June to 0.1 per cent from 0.2.

Still, analysts said any expansion in the economy, given global economic troubles and Canada’s weak export performance for the month, was cause for relief.

“The fear factor of a decline, given an abundance of weak indicators for the month, was avoided,” said Derek Holt, vice-president of economics for Scotia Capital.

Holt said the third quarter is still expected to be weak, with Scotiabank tracking a one per cent annualized pace. That is half the rate the Bank of Canada predicted in July.

On an annual basis, output was up 1.9 per cent, “consistent with an economy that is still struggling to crack the two per cent growth mark,” noted Bank of Montreal’s Robert Kavcic.

The most obvious weakness in the month was in the exports sector. Statistics Canada has already reported a $2.3-billion trade deficit for the month, the biggest in nominal terms in history.