MNI: Canada GDP Stumbles Again In Aug, Signs Of Weak US Trade

Canada's GDP stumbled again in August marking the fifth month out of eight this year production has failed to expand, as weakness in manufacturing and warehousing suggests more damage from the U.S. trade war.

Output was little changed in August according to Statistics Canada's flash estimate Friday, with signs of weakness across goods producing sectors offset by gains in retail and wholesale sales. The August stall followed a July GDP gain of 0.2% that followed three months of 0.1% contractions. 

The report is in line with the Bank of Canada's view the economy can avoid a technical recession with modest growth in the third quarter following a second-quarter contraction. The central bank in July estimated Q3 growth at a 1% annualized pace but some private economists see it coming in at half that rate. Governor Tiff Macklem lowered the policy interest rate a quarter point to 2.5% earlier this month after three meetings on hold, saying there's more evidence the U.S. trade war is slowing growth and cooling elevated core inflation. 

Investors see potential for at least one rate cut over the next three meetings in October, December and January, depending mostly on how the trade war hits Canada’s economy.

Another StatsCan report Friday said flash wholesale sales for August fell 1.3% led by automobiles, one of the areas facing the toughest U.S. tariffs. 

The July GDP report also showed real estate rose to a record high for a second month. Automobile production also showed a gain, but StatsCan said that was partly due to a seasonal adjustment effect related to the onset of U.S. tariffs that juggled production schedules around typical summer maintenance shutdowns.