TORONTO — Federal Finance Minister Jim Flaherty says he's concerned that private demand isn't helping to boost Canada's economy.

Flaherty says any improvement in the economy so far is "fragile and tentative."

His comments came as it was revealed that the Canadian economy shrunk a disappointing 0.1 per cent in August, the first outright decline in three months. The Bank of Canada is predicting two per cent growth for the third quarter.

By comparison, the U.S. economy grew by 3.5 per cent in the July to September quarter.

But Flaherty says this is largely attributable to one-time programs like Cash for Clunkers.

The finance minister was in Toronto to announce funding for the Royal Agricultural Winter Fair.