TORONTO (Reuters) - Canada’s economy grew at an annualized rate of 1.3% in the third quarter, led by higher business investment and increased household spending, Statistics Canada said on Friday.
“The headlines are bang on expectations but below the surface there is plenty to be optimistic about. Inventories were a huge drag on this report.”
“I think that Canadian GDP was stronger than it appeared in the third quarter based on a robust consumer and a turn in the real estate sector. This may mark the return to Canadians spending more as they feel better about home prices ... The consumer has taken a couple of years off and if we can get the consumer back, along with a pickup in exports I think there are lots of reasons why 2020 growth can outpace what’s built in now.”
“Overall, it’s very close to expectations. I think if we would shade it one way or the other, I would say it was ever so slightly on the soft side of what we were looking for, but certainly not enough to really move the needle in terms of the policy outlook.”
“We still lean to the fourth quarter being in a similar range. There is some downside risk to the fourth quarter though, as a result of both the GM strike first, and then the CN strike. Both those things could temporarily dampen growth a bit more than expected in Q4.”
“Not spectacular growth in Q3 but also not worse than feared. Business investment actually rose which we were somewhat surprised at. We were expecting a decline in the quarter, so that’s encouraging to see that business investment wasn’t weighed down too much by global developments.”
“The Bank of Canada has been concerned about spillover from weak exports and business investment into the household sector, and we’re not really seeing much evidence of that. That said, I think if we continue to see sub-trend growth along the lines of what we had in Q3, that leaves the door open to the Bank of Canada lowering rates.”
Reporting by Jeff Lewis, Allison Martell and Fergal Smith; Editing by Denny Thomas