Contraction 'only a matter of time': What the GDP numbers say about Canada's economy

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Contraction 'only a matter of time': What the GDP numbers say about Canada's economy
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Canada\u0027s economy avoided contraction in July, expanding 0.1 per cent. Read what the economists say

The reading “surprised to the upside” by beating estimates that there would be a pullback of 0.1 per cent for the month.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc.

For the Bank of Canada, it needs to see further slowing in the economy in order to ease inflationary pressures. We have seen this already in recent labour market indicators, but GDP continues to remain in positive territory. How long this will last is uncertain, especially given our expectation that the BoC will get rates to 4 per cent by year-end.”Article content“The surprise increase in July GDP puts Q3 growth on better footing than expected. Quarterly GDP is on track for a modest gain, in line with our call for a one per cent annualized increase.

While the economy looks set to continue expanding for now, the Bank’s rapid tightening and the worsening global backdrop suggest that it is only a matter of time before activity contracts.

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