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OTTAWA, Sept 30 (Reuters) - The Canadian economy powered ahead in July, rising a strong 0.4 percent, a figure likely to increase pressure on the Bank of Canada to keep pushing interest rates up.
Statistics Canada said on Monday that July gross domestic product was helped higher by a 1.5 percent climb in industrial production, a sector where output had not changed in June, when GDP growth was just 0.1 percent.
A Reuters survey of economists, on average, had predicted a 0.3 percent rise in GDP in July.
For the second quarter, the economy grew by 4.3 percent, outperforming most other major industrialized nations.
The Canadian dollar rose moderately on the news on Monday morning.
Manufacturing output rose by 1.4 percent in July, while utilities jumped by 2.9 percent as a heat wave boosted demand for power.
It was the 10th consecutive monthly rise in GDP in Canada, which is leading the Group of Seven leading industrialized nations in terms of growth.
Forecasters at the International Monetary Fund said last week that the trend would continue next year.
The strong performance of the domestic economy poses a challenge for Bank of Canada Governor David Dodge, who must balance uncertainty about the global economy with a domestic outlook that has generally been quite strong.
He said at the weekend that interest rates would have to rise, the question being the speed at which the Canadian economy approached full capacity.
The bank, which has raised interest rates three times so far this year, next sets interest rates on Oct. 16.
The surge in manufacturing output was led by the transportation sector, as strong demand and new U.S. emission regulations on truck engines boosted Canadian production of cars and heavy trucks, Statistics Canada said.
But a severe drought in western Canada lowered output in agriculture, forestry and fishery, with a steep fall in exports of wheat, rapeseed and other cereals, the government statistics agency said.
All figures are adjusted for inflation and seasonal factors.