OTTAWA (CP) -- Canda's economy shrank 0.3 percent in August following hefty 0.7 percent growth in July, in what is widely seen as the first in a series of monthly pullbacks.
The drop, generally in line with projections, was largely due to declines in wholesale trade, manufacturing and the mining and oil and gas industries.
"This result simply unwinds part of July's surprising strength, and would normally be seen as no big deal," commented BMO Capital Markets economist Douglas Porter.
"However, given the marked deterioration in the economic outlook since that time, it unfortunately will look like a loud early warning shot."
In addition to the factory and energy sectors, there were declines in construction and in rail and truck transportation, Statistics Canada said, while accommodation and food services advanced and there was no change on the month in output from the finance and insurance industry and the retail sector.
Output in the energy sector fell 0.5 percent in August after increasing 2.7 percent in July. Output of refineries declined 4.5 percent, partly as a result of production disruptions at two major plants.
Wholesaling dropped 3.1 percent in August, more than offsetting its July gain.
The manufacturing sector fell 1.1 percent in August, erasing its July gain. There were significant decreases in production of wood products, plastics and rubber products, machinery, fabricated metal products and transportation equipment.
Construction retreated 0.3 percent in August. A continuing decrease in single-family house construction more than offset a rise in multi-unit structures, while construction of non-residential buildings fell broadly.
Activity of real-estate agents and brokers dropped 2.9 percent in August.
The report on real gross domestic in August "is a bit of ancient history, since it precedes the intense financial turmoil which erupted in mid-September," BMO's Porter commented.
"We expect that the decline in August will cascade into the fourth quarter and likely into the first half of next year."
