The Canadian economy growing for the seventh month, no rapid rate hike

OTTAWA (Reuters) – The Canadian economy posted its seventh consecutive monthly gain in August, its longest growth in more than a year. However, badysts said the Bank of Canada has little incentive to raise interest rates next month.

Statistics Canada said Wednesday that GDP in August edged up 0.1%. Analysts in a Reuters poll had predicted no change from July.

The last time the country experienced such long and uninterrupted growth was over a nine-month period from November 2016 to July 2017.

If the GDP is stable in September, the annualized growth of the third quarter should be about 1.8%, which corresponds to the latest forecast of the central bank.

The central bank, which raised rates for the fifth time since July 2017, reiterated Tuesday that more rises are needed to manage an economy operating at full capacity, with unemployment levels around their lows levels in 40 years.

The bank has to announce its rate decisions in December and January.

"So, as long as we maintain growth around that 2%, that means the Bank of Canada will likely continue to raise interest rates over time," said Nathan Janzen, Senior Economist at the Royal Bank of Canada. Canada.

Market expectations for a rise in interest rates on December 5, as reflected in the overnight index swap market, declined slightly from 34.21% to 33.88%.

In a poll released by Reuters on Wednesday, badysts expect the Bank of Canada to raise interest rates three times next year, but will not do anything in December.

Statscan said the subsector of oil and gas extraction had risen 1.9% in August, with total crude oil production in the oil-rich province of Alberta having reached a record level. The finance and insurance sector rose 1.0%.

The manufacturing sector fell 0.6%, partly because of a 1.9% decline in motor vehicle badembly after atypical stops at some auto plants. Overall, 12 of the 20 industrial sectors posted declines.

"Rates will end up having to (increase) … all in time, of course. No urgency is needed on this front, as this report on mediocre growth suggests, "said Doug Porter, Chief Economist at BMO Financial Group.

Statistics Canada also reported that producer prices in Canada edged up 0.1% in August from August due to higher prices for chemicals and energy and petroleum products. Analysts had predicted no change.

Raw materials prices fell 0.9% as demand for conventional heating oil declined.