08:25 AM EDT, 09/30/2024 (MT Newswires) -- Canadian real gross domestic product eked out a 0.2% month-over-month advance in July, which was a tad better than the 0.1% consensus rise forecast -- but the "flash" estimate for August is 0.0%, noted Rosenberg Research after Friday's data.

A sizeable portion of the growth in July came from two sectors: utilities and a rebounding autos, said the bank. With the starting point in June having also been 0%, it looks like Q3 real GDP is tracking just a bit under a 1.0% annual growth rate, which is actually a deep negative 3% in per capita terms and far below the Bank of Canada's most recent 2.8% increase prediction.

The door is wide open -- or should be -- for a 50-basis point rate cut at the next policy meeting on Oct. 23 though it should be mentioned that some idiosyncratic features held activity back in July, namely wildfires out in Western Canada and the looming but ultimately brief rail strike in August, pointed out Rosenberg.

The fact that the goods sector rose less than 0.1% month over month after June's -0.35% drubbing alongside the third consecutive sub-0.2% print on service sector activity attests to the broad softness in the Canadian economy, it added. Durable manufacturing sliding 0.7% after a huge 2.2% setback in June tells Rosenberg that the domestic economy needs a weaker currency, not a stronger one -- added ammunition for the BoC to start picking up the pace of rate cuts.

Construction sagging 0.4% on top of the 0.6% slump in June and virtual stagnation in the real estate sector also highlights how interest rate-sensitive sectors are suffering under the weight of the lagged impact of the hiking cycle, and shows the damage the central bank did in its tightening stance in 2022 and 2023, according to Rosenberg.