The Canadian economy unexpectedly contracted 1.1% in the second quarter on an annualized basis and likely shrank by 0.4% in July after a 0.7% rise in June.
It was the first time the economy had contracted since the second quarter of 2020, when the first wave of the coronavirus peaked. Forecasts were 2.5% annual growth and 0.7% growth in June.
The decline in the second quarter was partly due to significant declines in home resale activity and exports. In the wake of these data, the Canadian dollar gave up its previous gains against the US dollar and fell to 1.2618 Canadian dollars per dollar.
The Bank of Canada last month forecast a 2.0% annual growth for the second quarter.