"The snappy rebound in July confirms that the economy's June swoon was driven by temporary special factors, and was not the start of new ugly trend"
- Doug Porter, chief economist at Bank of Montreal's capital markets unit
After a sharp fall in June, Canadian economy rebounded in July, expanding at the fastest pace in two years, supported by a strong construction output and adding to evidence the economy will build up steam in the coming months. The nation's gross domestic product rose 0.6% in the middle of summer, reaching C$1.58 trillion, posting the biggest monthly gain since July 2011, meeting analysts' expectations. GDP has fallen 0.5% in June- the biggest decline since the severe 2009 recession, as the economy was hit by a construction strike in Quebec and flooding in Alberta. However, improvement in construction activity, which expanded 1.9%, was not the only factor that contributed to growth. Manufacturing sector expanded 1.1% in July, after a decline of 1.0% in the prior month. More specifically, durable goods posted a strong gain, while production of non-durable goods, like textile, clothing or leather products, ticked higher as well. Despite signs of economic stabilization, the central bank kept its key lending rate at 1% since December 2010, in order to encourage investment and spending. Furthermore, consumer sentiment climbed to the highest since March 2011, as employment increased, while the housing market remained buoyant. The gauge of consumer mood jumped to 59.75 in the period ended September 27, up from 59.23. With improvement in all sectors, stronger hiring and a pickup in consumers' confidence, Canadian economy is most likely to accelerate to 2.4% in the next year.
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