Canadian economy stalls in second quarter as higher interest rates take hold
OTTAWA –
The Canadian financial system appeared to stall within the second quarter as funding in housing continued to fall, led by drop in new development.
Statistics Canada says the financial system contracted at an annualized charge of 0.2 per cent within the second quarter.
The company additionally revised its studying for development within the first quarter to an annual tempo of two.6 per cent, down from 3.1 per cent.
The decline within the second quarter got here as housing funding fell 2.1 per cent to publish its fifth consecutive quarterly lower.
New development dropped 8.2 per cent within the quarter, whereas renovation spending fell 4.3 per cent.
The drop in spending got here as Canadians face larger borrowing prices fuelled by rate of interest hikes by the Bank of Canada, which is making an attempt to deliver inflation again to its goal of two per cent.
The weak spot within the second quarter was additionally attributed to decrease stock accumulations, in addition to slower development in exports and family spending.
Exports of products and providers crept up 0.1 per cent within the second quarter in contrast with a 2.5 per cent enhance within the first quarter.
Growth in actual family spending slowed to 0.1 per cent within the second quarter in contrast with 1.2 per cent within the first quarter.
Meanwhile, business funding in non-residential constructions gained 2.4 per cent within the second quarter, boosted by a 3.3 per cent achieve in spending on engineering constructions.
The general pullback within the second quarter got here because the financial system contracted by 0.2 per cent in June.
Services-producing industries dropped 0.2 per cent in June, whereas goods-producing industries contracted 0.4 per cent for the month.
Statistics Canada additionally mentioned its early estimate for July advised actual GDP was primarily unchanged for the month, although it cautioned the determine can be up to date.
The report comes forward of the Bank of Canada’s rate of interest resolution set for subsequent week.
The central financial institution raised its key rate of interest goal by 1 / 4 of a share level to 5 per cent in July because it mentioned it remained involved that progress towards its two per cent inflation goal might stall.
