Canada's Economy Takes A Breather, But Don't Call It A Slowdown

Canada's transportation and warehousing sector contracted slightly in July as economic growth paused on weakness from the energy sector.

Transportation and warehousing sector declined by 0.5% in the month that saw Canada's gross domestic product remained unchanged in figures released by Statistics Canada on October 1. 

Rail was the worst performer within the transport sector, dropping by 3.1% during the month because of a drop of petroleum and chemical products, as well as minerals and metals. Trucking declined by 0.7%.

The decline in rail appears to have stemmed from a 3.5% plunge in oil, gas and mining activity – which itself put a damper on Canada's economic growth. Otherwise, goods-producing sectors declined by 0.7%, which could explain the decline in trucking. 

Other notables included a 0.4% decline in transportation equipment, which saw weakness in auto parts eclipsing gains in aerospace. 

While the report came in slightly weaker than expectations and ended four consecutive months of growth, analysts said the fundamentals of Canada's economy remained solid and resilient despite global pressures in trade and manufacturing.

"If you're looking for generalized weakness in Canada's economy, today's report ain't it," TD Senior Economist, Brian DePratto wrote in a research note.  

Josh Nye, senior economist with RBC, agreed, writing, "There are few signs of a broader slowdown in today's data."

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