Canada economy grows more than expected, boosting recovery hopes

Mon Dec 23, 2013 10:11am EST
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By David Ljunggren

OTTAWA (Reuters) - The Canadian economy showed unexpected strength in October, growing for the fourth month in a row and boosting market hopes that the country might finally be shaking off the worst of the great recession.

Statistics Canada said on Monday the economy had grown by 0.3 percent from September. Analysts had forecast a 0.2 percent advance after September's 0.3 percent increase.

Although Canada regained most of the jobs it lost since 2008 and 2009, growth has been largely sluggish, prompting the Bank of Canada to make clear it will not raise its key interest rate until it sees signs of a firm recovery.

The economy has posted growth every month this year apart from June.

The output of goods-producing industries grew by 0.4 percent in October on higher manufacturing while service industries output climbed by 0.3 percent as almost all major industrial sectors registered growth.

"Canada's economy is showing sustained strength for the first time since the early days of the recovery," said BMO Capital Markets economist Sal Guatieri.

The Bank of Canada has said annualized GDP growth in the fourth quarter will be 2.3 percent, down from 2.7 percent in the third. Guatieri, though, said October's data suggested fourth quarter growth could be around 2.6 percent.

"Importantly, this would mark the first quarter since early 2011 that GDP has posted successive increases above two percent - that is, above potential," he said in a note to clients.   Continued...

A woman carries shopping bags during the Christmas shopping season in Toronto, December 7, 2012. REUTERS/Mark Blinch