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Canada’s economic engine stalls as third quarter begins

Canada’s economy kicked off the third quarter with a marked downshift from the previous three months, with no growth in July.

The goods-producing sector shrank by 0.5 per cent to mark the first decline in five months, on the back of slumps in mining, oil and gas extraction and manufacturing, Statistics Canada said today.

The services side of the ledger edged up 0.2 per cent.

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July’s reading comes after spectacular growth in the second quarter, an annual pace of 4.5 per cent, which in turn followed a strong first three months.

Analysts had predicted a slower pace going forward.

“We suspect that the slower start to Q3 gives us the flavour of things to come, with our forecast for the back half of the year tracking half the pace seen at the start of 2017,” said Nick Exarhos of CIBC World Markets.

“That’s another reason why we see the Bank of Canada using a more gentle hand with tightening from here.”

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