Canada’s GDP grew at an annual rate of 5.4% in the third quarter: official – Business & Finance

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MONTREAL: The Canadian economy grew at an annual rate of 5.4% in the third quarter, rebounding strongly from a slowdown in the previous three months, according to government data released Tuesday.

The expansion has been faster than analysts expected, due to increased spending by Canadian households as pandemic-related restrictions were lifted and growth in exports, especially oil, reported Statistics Canada.

However, the second quarter contraction has been revised down to 3.2%, worse than the 1.1% drop initially announced.

During the July-September period, GDP grew by 1.3% compared to the previous quarter, according to the data.

Consumers have taken over goods, with double-digit increases in spending on clothing and footwear, pushing pre-pandemic totals above.

Demand for services has also increased, with sharp increases in spending on transportation, recreation and culture, as well as food, drink and accommodation, according to the report.

As “households and businesses, in Canada and elsewhere, have resumed their normal activities,” this “has increased household spending and created greater demand for exports,” according to the report.

But after four quarters of strong growth, housing investment declined, with the biggest quarterly drop in new home construction since 2009, the agency said.

As the economy grew, compensation of employees saw the biggest increase since 2000, while the household savings rate slowed but rose again to double digits.

However, analysts noted that the downward revision for the second quarter meant the last six months were a bit disappointing, while a new strain of Covid-19 could weigh on the last three months of the year.

“The Canadian economy surprised on the upside during third quarter growth, but will anyone care given the threat the omicron variant could pose for the next few quarters? Said Avery Shenfeld of CIBC Economics.

“In the coming days, attention will still be focused on how the omicron variant, if proven resistant to the vaccine, could delay the timing of the next stage of economic activity,” the analyst noted.

The Bank of Canada signaled last month that it could start raising interest rates as early as April, as inflation is expected to stay above the target range of one to three percent.

Inflation peaked at 4.7% in 18 years in October.


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