Canada's GDP rebounds in July after three months of contraction

Canada's monthly gross domestic product rebounded from three months of contraction to grow by 0.2% in July as mining, manufacturing and wholesale trade boosted growth, data showed on Friday.

- 

Canada's GDP had shrunk in the second quarter by 1.6% annualized and economists were closely tracking the July GDP growth figure to get an indication of whether there will be a contraction in the third quarter.

Two consecutive quarters of contraction are considered a technical recession.

A preliminary estimate showed August would most likely see no growth but avoid a contraction, Statistics Canada said, as increases in services-producing industries were likely to be offset by goods-producing sectors.

The advance estimate is not always accurate and could change.

Analysts polled by Reuters had forecast a GDP growth of 0.1% in July from a 0.1% contraction in June.

"Through the monthly volatility, Q3 GDP is tracking a 0.8% annualized rate, which is better than where it was tracking before today's release," Andrew Grantham, senior economist at CIBC Capital Markets wrote in a note.

Canada's economic growth was hobbled in the last few months after a strong start this year as a barrage of tariffs from the US hit critical sectors of the economy.

The Bank of Canada has said that trade disruptions and tariffs have significantly hit key sectors forcing business investments down, and there were chances that the malaise might spill over to other sectors in the coming months.