Economy contracts for first time since recession

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Globe and Mail Update
Published Wednesday, Aug. 31, 2011 8:47AM EDT
Last updated Wednesday, Aug. 31, 2011 9:07AM EDT

The Canadian economy shrank 0.4 per cent in the second quarter of the year, the first contraction since the recession, as supply disruptions slammed exports.

The country’s gross domestic product registered a sharp slowdown in the April to June period after a revised 3.6-per-cent reading in the first quarter of the year, Statistics Canada said Wednesday.

The slump reflects a number of temporary factors, as wildfires in northern Alberta and maintenance shutdowns sliced oil productions and Japan’s tsunami caused supply disruptions. The manufacturing and finance sectors, the agency said.

“Yes, the headline is not good but temporary factors dragging activity lower such as Japan's supply disruptions and wildfires in Northern Alberta are, well, temporary,” said Jennifer Lee, senior economist at BMO Nesbitt Burns in a note. “Look for a better third quarter.”

Economists had been expecting a flat reading for the quarter and a 0.1-per-cent increase in June. The economy expanded 0.2 per cent in June.

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