OTTAWA (Reuters) -Canada’s economy unexpectedly shrank 1.1% in the second quarter on an annualized basis and most likely contracted 0.4% in July following a 0.7% gain in June, Statistics Canada data indicated on Tuesday.
It was the first time the economy had shrunk since the second quarter of 2020, when the first wave of COVID-19 peaked. Analysts surveyed by Reuters had expected second-quarter annualized growth of 2.5% and a gain of 0.7% in June.
Statscan said the second-quarter drop was due in part to substantial declines in home resale activities and exports.
The Canadian dollar gave back earlier gains to trade nearly unchanged against the U.S. dollar, slipping to C$1.2606 to the greenback, or 79.33 U.S. cents.
Last month the Bank of Canada forecast annualized growth of 2.0% for the second quarter.
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