Canada's GDP rises 0.3% in August

Canada's economy rose 0.3 per cent in August following a 0.1 per cent drop in July, helped by oil and gas extraction, wholesale trade and manufacturing.

The figures released by Statistics Canada were in line with analysts' expectations.

The federal agency also said increases were recorded in the finance and insurance sector, construction and retail trade. Utilities and forestry decreased, while public-sector output was unchanged.

Mining and oil and gas extraction rose 0.5 per cent, wholesale trade rose 1.1 per cent and manufacturing grew 0.5 per cent.

The finance and insurance sector advanced 0.6 per cent, construction was up 0.4 per cent and retail trade edged up 0.1 per cent in August.

Last week, the Bank of Canada said it now believes Canada's economy will likely grow about three per cent this year instead of the 3.5 per cent it had projected in July, and much of this growth took place in the first part of the year.

For next year, the bank predicts growth of 2.3 per cent, six-10ths of a point lower than previously projected, and it forecasts 2012 growth of 2.6 per cent.

"The August data showed relatively broad-based growth after a disappointing July," Dawn Desjardins, assistant chief economist at RBC, said in a report. 

"This combination sets the economy on course to expand at a 1.8 per cent annualized pace — assuming another 0.3 per cent rise in September — in the third quarter, just slightly slower than the second quarter's two per cent increase. This is in line with the forecast issued by the Bank of Canada last week."

The modest numbers pushed the Toronto stock market higher. The S&P/TSX composite index gained 51.36 points, or 0.4 per cent, to 12,615.46. The Canadian dollar moved higher following the report, up 0.21 of a cent to 98.11 cents US.

Meanwhile, the U.S. gross domestic product grew at a meagre two per cent annual rate during the third quarter, which is far short of what would be needed to reduce the high unemployment rate.