Q4 growth modest after boisterous Q3
By Randall Palmer and Louise Egan
OTTAWA (Reuters) - Canada's economic growth slowed markedly in the final quarter of 2011, leaving the Bank of Canada with room to keep interest rates at historic lows, but there were surprising signs of underlying strength that point to speedier 2012 growth.
Statistics Canada said on Friday that growth had fallen to an annualized 1.8 percent in the fourth quarter from a sharply upwardly revised 4.2 percent in the third, as positive temporary factors faded and as government stimulus continued to wind down. The figures are seasonally adjusted.
The growth rate was exactly as expected in a Reuters survey of analysts but fell short of the 2.0 percent the Bank of Canada had predicted in its January Monetary Policy Report. U.S. growth was 3.0 percent in the fourth quarter.
In December, the economy grew at 0.4 percent from November, higher than the 0.3 percent forecast and rebounding from November's 0.1 percent drop. In the quarter, consumer spending and business investment also exceeded expectations.
"A lot of the details are better than expected. First of all there were upward revisions ... The monthly number was a bit stronger than expected, so we head into 2012 with a touch more momentum than expected," BMO Capital Markets Deputy Chief Economist Doug Porter said.
The Canadian dollar eased on Friday morning after four days of gains against its U.S. counterpart but traders said the muted GDP growth had little to do with it.