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Economy’s bounce back from recession bigger than expected

Finance Minister Joe Oliver told media Wednesday he expects the economy to post solid growth in the second half of the year.

The country’s economy grew 0.3 per cent in July, a faster-than-expected rate that furthers a rebound in output following a technical recession in the first half of the year.

Statistics Canada said Wednesday gains were led by oil and gas activity as well as manufacturing.

The consensus call among economists was for the economy to grow 0.2 per cent in July, following a robust gain in June – which officially snapped the country’s economy out of a months-long contraction.

The growth in June and July followed five consecutive monthly declines from January to May. The five-month dip led to two straight quarters of back-to-back declines for the economy, meeting the technical definition of a recession — albeit a short-lived and mild one.

“After a growth stumble in the first part of the year, the Canadian economy appears to be picking itself back up,” Nick Exarhos, an economist at CIBC, said.

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WATCH BELOW: Statistics Canada reported the economy grew for the second consecutive month in July, but Global’s Bindu Suri reports on why some businesses in slumping Alberta are still pinching pennies when it comes to certain luxuries.

MORE: ‘Best. Recession. Ever.’

Experts at TD Bank said in their latest forecast last week the country’s economy will expand by 1.2 per cent for the whole year, but “the annual figure masks a rebound in the second half of the year” as growth kicks back into gear at an annualized clip of 2.5 per cent.

“The release of July’s GDP [figures] provides further evidence that the worst of the Canadian economic soft patch is behind us and puts some upside to our view,” TD economist Diana Petramala said.

The details

The mining, quarrying, and oil and gas extraction sector grew by 2.9 per cent in July.

Non-conventional oil extraction grew 9.1 per cent for the month, following a 7.0 per cent gain in June following maintenance shutdowns and production difficulties in April and May. Conventional oil and gas extraction was up 0.8 per cent in July.

Manufacturing output rose 0.6 per cent in July, while the finance and insurance sector rose 0.8 per cent for the month.

MORE: The biggest threat to Canada’s fragile economic recovery isn’t oil 

While some experts may point to a lower dollar finally making meaningful strides in jumpstarting a revival in Canadian manufacturing and exports, others remain skeptical.

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“While it’s tempting to conclude that the lower Canadian dollar might finally be starting to support a recovery, we need far more convincing evidence than this,” David Madani, Canadian economist at Capital Economics said. “The damage done by the past appreciation of the loonie may take years to reverse.”

Statistics Canada also revised its result for June to show growth of 0.4 per cent compared with an initial reading of 0.5 per cent growth.

GDP reports are considered a lagging economic indicator rather than leading.

The federal stats agency reports monthly gross domestic product, or GDP, figures, about two months after the end of the month, the time required to tally the data. 

— with files from Global News