Canadian GDP grew by 0.5% in July on oilsands rebound

The Canadian economy performed better than expected in July, growing by 0.5 per cent on the back of a rebound in oil and gas output following the Fort McMurray, Alta., wildfires.

Economists surveyed by Thomson Reuters had been projecting a 0.3 growth figure for the month.

Statistics Canada said activity in themining, oil and gas extractionsectorwas up 3.9 per cent from June, including a19 per cent increase in non-conventional oilextraction, as oilsands production returned to normal levelsfollowing maintenance shutdowns in April and the Fort McMurraywildfires andevacuation in May.

The goods-producing sectors ofthe economy roseby one per cent, whilethe service side was up by 0.3 per cent for the month, Statistics Canada said.

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"The story is more positive than just the recovery [from the wildlfires]however, with a welcome broad-based expansion of economic activity in the month," said TD Bank economist Brian DePratto. "Today's report points to healthy (if somewhat artificially boosted) economic momentum for the third quarter. We are currently tracking economic growth of roughly 3.0 per centfor the quarter."

TD, along with several other financial institutions, have cautioned that the healthy economic growth forecast for the thirdquarter is expected to be followed by a return to more modest expansion.

"The only other real story of note in the data this morning was a dropoff in construction activity, something that we could see more of as residential investment cools down from strong levels," said NickExarhosofCIBCEconomics.

Activity in the construction sector fell by0.8 per cent

In the wake of the report, the Canadian dollar closed Friday at76.24 cents US, up 0.19 of a cent.as someeconomists saw the July GDP figures easing pressure on the Bank of Canada to make a near-terminterest rate cut.

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