Unexpected consumer exuberance picks up the slack as exports plunge
By Theophilos Argitis
Canada’s economy showed unexpected resiliency in the third quarter outside of the trade sector, even as a sharp decline in exports drove a slowdown in overall growth.
Highlights of 3rd-Quarter GDP
Annualized gross domestic product slowed to 1.7% from a revised 4.3% in 2nd-Qtr. Economists estimated a 1.6% rate The economy also ended the third quarter with a faster-than- expected 0.2% rate in September Household consumption increased by an annualized 4% versus estimates for below 3% growth.
Key Takeaways
The overall figures are largely in line economist forecasts but the composition is more tilted toward consumption than expected as households continue to binge on spending -- fuelled by a buoyant jobs market. A separate report on Friday from Statistics Canada showed the jobs market added about 80,000 jobs in November and the unemployment rate fell to 5.9 percent, the lowest since 2008.
Other Details
Copyright Bloomberg 2017
Related stories:
BMO GAM sees steady economic growth, weakness in bonds
Investors react to Canadian banks’ Q4 results
Canada’s economy showed unexpected resiliency in the third quarter outside of the trade sector, even as a sharp decline in exports drove a slowdown in overall growth.
Highlights of 3rd-Quarter GDP
Annualized gross domestic product slowed to 1.7% from a revised 4.3% in 2nd-Qtr. Economists estimated a 1.6% rate The economy also ended the third quarter with a faster-than- expected 0.2% rate in September Household consumption increased by an annualized 4% versus estimates for below 3% growth.
Key Takeaways
The overall figures are largely in line economist forecasts but the composition is more tilted toward consumption than expected as households continue to binge on spending -- fuelled by a buoyant jobs market. A separate report on Friday from Statistics Canada showed the jobs market added about 80,000 jobs in November and the unemployment rate fell to 5.9 percent, the lowest since 2008.
Other Details
- Exports plunged an annualized 10.2%, subtracting 3.4 percentage points from the growth rate. Economists expect this slump to reverse in the fourth quarter Canada’s consumers though are on a tear. In addition to the 4% consumption growth in the third quarter, Statistics Canada revised up 2nd-quarter growth to 5%. That’s the best two- quarter gain since before the 2008-2009 recession
- The spending is being fuelled by a buoyant jobs market that is driving incomes. Compensation of employees rose an unannualized 1.3% in nominal terms in the third quarter, the strongest growth since 2014
- Consumption is also being financed by a lower savings rate, which fell to 2.6% in the quarter Government investment jumped at an annualized 13%, adding 0.5 points to the growth rate
- Another positive is businesses continue to ramp up inventories, rather than pare down sharp increases earlier this year. Inventories added more than 1 percentage point to growth in the quarter Non-residential business investment grew for a third straight quarter, up an annualized 3.7%. Residential investment was down 1.4%
- Overall, gross fixed capital formation -- including government investment -- was up an annualized 3.5%
Copyright Bloomberg 2017
Related stories:
BMO GAM sees steady economic growth, weakness in bonds
Investors react to Canadian banks’ Q4 results
