OTTAWA The Canadian economy flatlined in August, underperforming expectations, and it likely contracted slightly in the third quarter, Statistics Canada data showed on Tuesday.

Analysts polled by Reuters had forecast a 0.1% month-over-month rise in August. July GDP was revised to being marginally negative from an initial report of zero growth.

The statistics agency said high interest rates, inflation, forest fires and drought conditions weighed on the economy in August.

In a flash estimate, Statscan said the economy was also unchanged in September, translating to an annualized 0.1% decline in the third quarter.

While likely to be revised, if those figures are confirmed next month, it would the second consecutive quarter of negative growth after an unexpected contraction in the three months ended June.

The Bank of Canada last week lowered its third-quarter annualized GDP growth forecast to 0.8% from 1.5% projected in July. The central bank said its 10 rate hikes between March 2022 and July 2023 have slowed the economy, and GDP growth is expected remain muted until end-2024.

Canada's goods-producing sector contracted 0.2%, dragged down by the third consecutive month of declines in the manufacturing sector.

The service-producing sector posted a 0.1% rise, in part helped by the wholesale trade and the transportation and warehousing subsectors.

(Reporting by Ismail Shakil in Ottawa; Editing by Dale Smith)