OTTAWA – The latest reading on the state of the Canadian economy is coming this morning and expectations are the results will be grim.
Statistics Canada is set to release data on how the economy fared in the second quarter, a three-month period marred by the wildfires in Fort McMurray, Alta., which forced the suspension of several oilsands operations.
According to Thomson Reuters, economists have predicted that the economy contracted at an annualized pace of 1.5 per cent in the second quarter.
In May, when the fires erupted, real gross domestic product fell by 0.6 per cent in what was the largest monthly drop in GDP since March 2009.
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However, the decline is expected to be short-lived and economists predict that the economy grew by 0.4 per cent in June.
Bank of Montreal senior economist Benjamin Reitzes says the figures for June are expected to show a sharp rebound.
“Oil production retraced more than half the decline, while housing construction bounced back as well. And manufacturing and wholesale activity rose modestly, while retail sales pulled back slightly,” Reitzes wrote.
“The magnitude of the bounce in oil production is a key source of uncertainty for this report.”
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In its June monetary policy report, the Bank of Canada estimated the economy contracted by 1.0 per cent in the second quarter. The central bank estimated that the halt in oil production and evacuation of the Fort McMurray region cut 1.1 percentage points of growth off the second quarter.
However, the Bank of Canada has predicted growth in the third quarter will rebound to 3.5 per cent due to the resumption of oil production and rebuilding efforts.
The central bank also said Ottawa’s new child benefits, which will support household consumption, and its commitment to boost infrastructure spending will boost the economy.
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