UPDATE 3-Canada's economy gathers speed, no rate move expected

Fri Nov 29, 2013 11:05am EST
 
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* GDP expands by 2.7 percent vs forecast 2.5 percent

* Growth fastest since third quarter of 2011

* Consumers, business inventories and investment lift GDP

By Louise Egan

OTTAWA, Nov 29 (Reuters) - Canada's economy grew at the fastest pace in two years in the third quarter but the pickup failed to quell doubts about the economy's underlying strength, and analysts still expect interest rates to stay at the current low level well into 2015.

Real gross domestic product grew by 2.7 percent, annualized, in the July-September period, driven mainly by consumer spending, business inventory accumulation and signs of a rebound in business investment.

The Statistics Canada report on Friday followed a disappointing 1.6 percent GDP gain in the second quarter. The performance beat the median forecast of 2.5 percent growth in a Reuters poll and was well above the Bank of Canada's 1.8 percent estimate last month.

The news could be the first sign the economy is pulling out of a slow spell to lift chronically weak inflation, which has been flagged by the Bank of Canada as the reason interest rates are now on hold for the foreseeable future.   Continued...