Canada's economy shrank in August against widespread expectations of no growth, Statistics Canada data showed on Friday, but an advanced estimate pointed out the economy might escape a recession in the third quarter.

The economy shrank by 0.3 per cent in August following an upwardly revised report of 0.3 per cent growth in the previous month, Statistics Canada said, which effectively offsets any growth so far in the current quarter.

This was the fourth monthly contraction in five months and was led by a drop in output from both the services and goods sector, it said.

An advance indicator suggested that the monthly GDP would likely expand by 0.1 per cent in September, taking the total annualized growth of the third quarter to 0.4 per cent, missing Bank of Canada's forecast.

The advance

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