Canadian economy edges out of recession

Mon Nov 30, 2009 3:55pm EST
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By Randall Palmer and Louise Egan

OTTAWA (Reuters) - The Canadian economy crawled out of recession in the third quarter after three quarters of contraction, but growth was subpar as industrial production continued to decline, particularly in the energy sector.

Statistics Canada reported on Monday 0.4 percent annualized growth in real gross domestic product for the period. But September provided a good hand-off into the fourth quarter by expanding 0.4 percent on a monthly basis from August.

The quarterly gain fell short of the market forecast of 0.7 percent growth, and economists were reluctant to declare the recession over, except in a purely technical sense.

"The economy virtually didn't grow in the third quarter, but I think the positive take-away is that it does confirm that the economy is not contracting any more," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

"It is consistent with the view that the recession was drawing to a close in the third quarter of the year, although it certainly probably didn't feel like it to most Canadians, given the fact that the labor market remains extremely weak and probably will remain weak for some time," he said.

The Canadian dollar was slightly weaker following the number, trading as low as C$1.0584 to the U.S. dollar, or 94.48 U.S. cents, compared with C$1.0557 to the U.S. dollar, or 94.72 U.S. cents, just before the data.

Canada underperformed the United States, which saw 2.8 percent growth in the third quarter, and lags behind some other Group of Seven nations that emerged from recession earlier.

"Canada was one of the last of the developed world economies to fall into recession back in Q4 2008, but has been one of the last to emerge," said Stewart Hall, a market strategist at HSBC Canada.   Continued...

<p>Shoppers are evacuated from a Bay department store in downtown Montreal August 24, 2007. REUTERS/Shaun Best</p>