People shop at the Eaton Centre in Toronto, Ontario, Canada November 22, 2022. (Photo Credit: REUTERS/Carlos Osorio)
Canada’s economy expanded at an annual rate of 1% in the third quarter, primarily driven by increased household and government spending, Statistics Canada reported on Friday. While the growth met economists' expectations, it fell short of the Bank of Canada’s forecast of 1.5%.
Economic gains were tempered by reduced business investments, particularly in machinery and aircraft, as well as a decline in exports, which outpaced the drop in imports.
Household spending showed strength in areas like new trucks, vans, and sports vehicles, along with financial services. However, expenditures on dining out and accommodations saw a decline. Meanwhile, government spending continued to rise for the third straight quarter.
Despite the modest growth, GDP per capita dipped by 0.4%, marking the sixth consecutive quarterly decline. Additionally, Statistics Canada revised its second-quarter growth estimate slightly upward to 2.2% from 2.1%.
This GDP report, along with an upcoming employment data release, will play a key role in shaping the Bank of Canada’s decision on an anticipated interest rate cut during its December 11 meeting. The employment figures, set to be released early next month, will provide the final major economic insight before the bank’s policy announcement.
Andrew Grantham, chief economist at CIBC Capital Markets, noted that while the revised data offers a slightly improved picture, the overall trend remains weaker than the Bank of Canada had anticipated. He added, “These figures support a 50 basis-point cut in December, though the upcoming jobs report will likely be a more decisive factor.”
