Canada’s economy contracts 0.3% in August as manufacturing and air travel weaken

Canada’s economy lost ground in August, with national output falling 0.3 per cent as both goods-producing and service sectors declined, according to new figures from Statistics Canada.

The agency said the drop largely erased July’s modest 0.3 per cent gain, which has been revised slightly upward. The August downturn was tied in part to an Air Canada flight attendants’ work stoppage that disrupted air transportation, along with weaker results in manufacturing, wholesale trade, and mining and quarrying industries.

Retail trade was the main bright spot, showing growth that partially offset losses in other sectors.

Statistics Canada’s early estimate for September points to a 0.1 per cent increase, suggesting a mild rebound led by improvements in manufacturing. On a quarterly basis, the economy is now expected to post annualized growth of 0.4 per cent for the third quarter, following a contraction in the spring.

Economists say the figures indicate continued sluggishness in Canada’s economy as higher borrowing costs and global uncertainties weigh on business investment and consumer spending.