Canada's GDP per capita declines for 5th quarter in a row amid surge in government spending

The Canadian economy grew by 0.5 per cent in the second quarter of the year, Statistics Canada has said.

On a yearly rate, it grew 2.1 per cent.

Higher government spending, business investment in machinery and household spending on services increased between April and June, the agency explained.

There were declines in exports, home building and household spending on goods, however.

On a per-capita basis – which roughly equates to living standards – GDP declined by 0.1 per cent.

That’s the fifth quarterly decline in a row, suggesting Canadians are becoming poorer despite the overall economy growing.

RBC, Canada’s largest bank, said the decline in per-capita GDP was due to “rapid population growth.”

In a note released this morning, the bank also said the vast majority – 80 per cent – of the GDP growth between April and June came from government spending.

“Although slightly above expectations, the details behind the Q2 GDP increase are softer than the headline growth rate and per-person output continues to decline,” RBC’s note added.

“Employment has declined for two consecutive months, and the latest unemployment rate is up almost one per cent from a year ago."

According to Statistics Canada, growth was flat in July and June. April, contrary to T.S. Eliot’s contention, was the best month, featuring growth of 0.4 per cent.

Another cut in the Bank of Canada’s key interest rate is expected on Sept. 4, bringing it down to 4.25 per cent.

Canada’s unemployment rate was 6.4 per cent last month, with 42,000 private sector jobs lost and 41,000 public sector jobs gained.