What is causing the Canadian economy to slow down? What is growing?
The manufacturing sector has been the biggest drag on the economy, followed by services, wholesale and trade and transport and warehousing. A Stats Can report noted that the closure of Canada’s major rail lines has contributed to a decline in transportation and storage.
The preliminary estimate for September suggests that real gross domestic product grew by 0.3%.
Statistics Canada’s estimate for the third quarter is weaker than the Bank of Canada’s forecast for annual growth of 1.5%.
Is another Bank of Canada rate cut coming?
The latest economic figures suggest continued weakness in the Canadian economy, giving the central bank room to continue cutting interest rates. But the size of that cut is still uncertain, with more data to come about inflation and the economy ahead of the Bank of Canada’s next rate decision on December 11.
“We don’t think this will set off any alarm bells (for the Bank of Canada) but it does underline their fears about a faltering economy,” wrote TD economist Marc Ercolao.
The central bank has repeatedly acknowledged that the economy is fragile and that growth must continue. Last week, the Bank of Canada halved interest rates as inflation returned to 2%.
Governor Tiff Macklem would not say whether the central bank would pursue another big rate cut in December and instead said the central bank would make one-time interest rate decisions based on incoming economic data.
The central bank expects economic growth to pick up next year as falling prices weigh on the economy.
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