Canada economy grows in October as recovery takes hold

Wed Dec 23, 2009 10:39am EST
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By David Ljunggren

OTTAWA (Reuters) - Canada's economy grew for the second consecutive month in October, the first back-to-back gain since late 2007, in a sign that the recovery is slowly taking hold after a painful recession.

Gross domestic product grew by 0.2 percent in October, after a 0.4 percent increase in September. Canada officially emerged from recession in the third quarter, when the economy eked out annualized growth of 0.4 percent.

"The report does suggest that Canadian economic activity is beginning to pick up steam in the fourth quarter," said Millan Mulraine, an economics strategist at TD Securities.

Market operators had predicted 0.3 percent October growth, but they noted that October marked the first time since November 2007 that the economy had posted consecutive monthly GDP gains of at least 0.1 percent.

Jonathan Basile, vice president economics of Credit Suisse Securities, said the figures were "a sign the economic recovery is building some steam".

The Canadian dollar initially rose slightly, but by 10:25 a.m. it had slipped to C$1.0520 to the U.S. dollar, or 95.06 U.S. cents, compared to C$1.0509 to the U.S. dollar, or 95.16 U.S. cents, shortly before the data were released.

Statscan said production increased in most major sectors in October, with business for real estate agents and brokers up 7.2 percent on a buoyant resale market.

Finance Minister Jim Flaherty said this week he would step in if necessary to try to cool a housing market that is benefiting from record low interest rates.   Continued...

<p>A real estate sign is seen on front of a house in Toronto June 19, 2009. REUTERS/Chris Roussakis</p>