Gross domestic product in Canada remained little changed in August, following a 0.1 per cent increase in July, as increases in financial services and the public sector offset a drop in manufacturing.

Services edged up 0.1 per cent on gains in finance and insurance and the public sector, Statistics Canada said Thursday. However, goods production shrank 0.4 per cent to the lowest level of output since 2021.

The statistics agency released a preliminary estimate of 0.3 per cent growth in September, and revised down its estimate for July to 0.1 per cent, from 0.2 per cent. That would mean GDP expanded at a one per cent annualized pace in the third quarter, below the Bank of Canada’s latest projection of 1.5 per cent, which keeps the door open for the central bank to cut interest rates further to try to inject some life into Canada’s stagnant economy.

Soft GDP growth reinforces the view that inflation is more likely to drift broadly lower rather than higher, “and is consistent with our base-case that the BoC will cut the overnight rate by another 50 bps in December,” Claire Fan, an economist at RBC, wrote in a research note. A one per cent third quarter growth rate would mean per-person GDP contracted for the eighth time in the past nine quarters, she wrote.

The central bank has cut interest rates at its past four meetings, including a “jumbo” cut of 50 basis points this month.

Statistics Canada said services production was bolstered by gains in the public sector—comprising education services, healthcare and social assistance and public administration—which grew for an eighth consecutive month. Financial and insurance services expanded for a third straight month.

Transportation and warehousing saw its second straight monthly decline, dropping 0.3 per cent, as work stoppages at Canada’s main rail carriers and a bridge collapse in Ontario hindered rail transport. Utilities contracted by 1.9 per cent, reversing recent gains, as cooler temperatures lowered electricity demand. Wholesale trade decreased 0.6 per cent, with machinery and equipment wholesalers among the hardest hit.

Some sectors saw gains. Retail trade rose 0.6 per cent, with motor vehicle sales driving the growth, while the energy sector grew 0.6 per cent due to increased natural gas extraction and rebounding mining activities after wildfire disruptions in July.

Statistics Canada will release its official third-quarter GDP figures on Nov. 29. The Bank of Canada’s next rate decision is scheduled for Dec. 11.