Canada’s real gross domestic product contracted 0.3% in August, erasing most of July’s 0.3% expansion, according to Statistics Canada data released Friday. A mid-month work stoppage involving 10,000 flight attendants at Air Canada contributed to broad-based declines across goods-producing and services-producing industries.
The August contraction marked the fifth decline in goods-producing industries since the start of the year, with that sector falling 0.6%. Services-producing industries edged down 0.1%, recording their first decline in six months.
Advance estimates suggest the economy rebounded slightly in September with 0.1% growth, though official figures will not be available until Nov. 28.
Flight attendants’ strike hits transportation sector
The transportation and warehousing sector declined 1.7% in August, driven primarily by air transportation, which dropped 4.6%. The flight attendants’ work stoppage began mid-month and resulted in flight cancellations that produced the sector’s largest decline since January 2022, when Omicron-related public health measures disrupted air travel.
Support activities for transportation fell 1.9%, marking the subsector’s largest decrease since January 2022. Pipeline transportation declined 0.7%, coinciding with lower natural gas exports to the United States and reduced domestic deliveries to residential, commercial and industrial customers.
Wholesale and manufacturing sectors contract
Wholesale trade declined 1.2% in August after three consecutive monthly increases. Motor vehicle and parts wholesalers led the decline, falling 8.3% as activity eased alongside lower exports and imports of motor vehicles and parts.
Food, beverage and tobacco wholesalers fell 5.2%, the largest monthly contraction since November 2022. The decline coincided with lower activity in food manufacturing.
The manufacturing sector contracted 0.5% on broad-based declines across durable and non-durable goods. Machinery manufacturing fell 2.8% and fabricated metal product manufacturing dropped 2.4%. Food manufacturing declined 1.3%, while beverage and tobacco manufacturing fell 4.7%.
Drought conditions hamper utilities
The utilities sector contracted 2.3% in August, falling to its lowest level since May 2018. Electric power generation, transmission and distribution declined 2.4%, marking the sixth consecutive monthly decrease as worsening drought conditions hampered hydroelectric power generation.
Mining, quarrying, and oil and gas extraction contracted 0.7%, partially offsetting back-to-back increases in June and July. Support activities for mining and oil and gas extraction fell 5.0% as rigging and drilling activity contracted.
Retail trade shows growth
The retail trade sector expanded 0.9%, with eight of 12 subsectors growing in August. Motor vehicle and parts dealers led the increase with 2.5% growth, recording their second consecutive monthly expansion driven by increases in new and used car dealers.
General merchandise stores rebounded 2.1%, while clothing and clothing accessories stores rose 2.7%. Sporting goods, hobby, book and music stores posted 6.9% growth.
Wood products face pressure from U.S. duties
In August, wood product manufacturing declined 1.9%, with sawmills and wood preservation accounting for all of the subsector’s decline. The drop followed late July and early August announcements from the United States of increased anti-dumping and countervailing duty rates on Canadian softwood lumber imports.
The volume of exports of lumber and other sawmill products declined 24.2% in August. In 2023, 31% of the wood product manufacturing subsector’s output was attributable to the United States, compared with 4% for all other countries combined.
Employment in the wood product manufacturing subsector remained essentially unchanged in August, according to the Survey of Employment, Payrolls and Hours.
