Oilsands rebound helps Canadian economy perform better than expected in July

The Canadian economy performed better than expected in July, growing by 0.5 per cent on the back of a rebound in oil and gas output following the Fort McMurray, Alta., wildfires.

Economists surveyed by Thomson Reuters had been projecting a 0.3 growth figure for the month.

Statistics Canada said activity in the mining, oil and gas extraction sector was up 3.9 per cent from June, including a 19 per cent increase in non-conventional oil extraction, as oilsands production returned to normal levels following maintenance shutdowns in April and the Fort McMurray wildfires and evacuation in May.

The goods-producing sectors of the economy rose by one per cent, while the service side was up by 0.3 per cent for the month, Statistics Canada said.

“The story is more positive than just the recovery [from the wildlfires] however, with a welcome broad-based expansion of economic activity in the month,” said TD Bank economist Brian DePratto. “Today’s report points to healthy (if somewhat artificially boosted) economic momentum for the third quarter. We are currently tracking economic growth of roughly 3.0 per cent for the quarter.”

TD, along with several other financial institutions, have cautioned that the healthy economic growth forecast for the third quarter is expected to be followed by a return to more modest expansion.

“The only other real story of note in the data this morning was a dropoff in construction activity, something that we could see more of as residential investment cools down from strong levels,” said Nick Exarhos of CIBC Economics.  

Activity in the construction sector fell by 0.8 per cent  

In the wake of the report, the Canadian dollar was trading up by about one-third of a cent at 76.39 cent US as economists say the July GDP figures easing pressure on the Bank of Canada to make a near-term interest rate cut.

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