"With oil production now almost back to its pre-wildfire level, the scope for further gains in the coming months is much more limited".
- Paul Ashworth, Capital Economics
The Canadian economy grew at a faster than expected pace in July, driven by the energy sector. According to Statistics Canada, the economy expanded 0.5% to C$1.67 trillion month-over-month in July, following the previous month's 0.6% rise and surpassing the 0.3% growth forecast. The increase was mainly driven by the Canadian energy sector that posted a 5% gain in the reported month, indicating a solid rebound in the performance of the sector, which was affected by the Alberta wildfires in May. Meanwhile, manufacturing increased 0.4% in the seventh month of the year, whereas accommodation and food services rose 1.4% in the same month, the largest gain since 2012. Construction declined 0.8% for the fourth consecutive month, while the finance and insurance sector grew 0.9%.
Economists state that the economy still faces some challenges amid the wildfires; however, the Bank of Canada forecasts that the growth will quicken to a 3.5% annualized pace in this quarter. After the release, the Canadian Dollar jumped 0.2% against its US counterpart , trading at C$1.3120, whereas a probability of a rate cut in 2017 dropped to 39% from yesterday's 44%.
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