(Ottawa) The Canadian economy grew at an annualized rate of 2.1% in the second quarter, beating the Bank of Canada’s forecast, but continued to contract on a per capita basis.
In its report on real gross domestic product (GDP), released Friday, Statistics Canada indicated that growth was supported by an increase in government spending, business investment in engineering structures and in machinery and equipment, as well as household spending on services.
At the same time, the economy saw declines in exports, residential construction and household spending on goods.
Economic growth stalled toward the end of the quarter, with real GDP remaining essentially unchanged in June. A preliminary estimate suggests that the economy remained stable in July as well.
The data comes just days before the Bank of Canada announces its interest rate decision, expected next Wednesday.
Economists widely expect the central bank to cut its key interest rate by a quarter of a percentage point, to 4.25%.
In the latest interest rate update, Bank of Canada Governor Tiff Macklem explained that the central bank was cutting interest rates in part to help the economy rebound.
Although high interest rates have not pushed the economy into a recession, it continues to lag amid strong population growth.
Indeed, the economy per capita contracted for a fifth consecutive quarter.
The labor market is also showing signs of weakness, as the unemployment rate continues to rise.
Canada’s unemployment rate was 6.4% in July, with young people and new immigrants disproportionately affected by the slowing labour market.