(Corrects Bank of Canada forecast made in October)
OTTAWA, Nov 29 (Reuters) - The Canadian economy expanded at an annualized rate of 1.3% in the third quarter on higher business investment and increased household spending, official data showed on Friday, and nearly echoing analysts’ expectations ahead of next week’s Bank of Canada rate decision.
Friday’s data matched a Bank of Canada forecast from October but was slightly higher than the 1.2% predicted by analysts in a Reuters poll.
“Overall, it’s very close to expectations,” said Doug Porter, chief economist at BMO Capital markets, adding the data 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.”
Canada’s central bank, which has warned the country’s export-dependent economy is not immune from global trade tensions, is set to release its next interest rate decision on Dec. 4.
The Canadian dollar declined, touching 1.3290 to the U.S. greenback or 75.24 cents U.S. after the data release.
The Canadian central bank has held rates steady for more than a year even as many of its counterparts, including the U.S. Federal Reserve, have eased.
Money markets are expecting the central bank to hold rates steady at 1.75% again in December, while a Reuters poll released on Tuesday found a slim majority of more than 30 economists now expect the Bank of Canada to hold rates through to the end of next year.
Gross domestic product in September grew 0.1%, Statscan said, on gains in both the services- and goods- producing sectors, matching analysts expectations as well as the 0.1% increase seen in August.
Statistics Canada also revised its second quarter annualized figure downwards on Friday to 3.5% from 3.7% and shifted its first quarter findings higher to 0.8% from an initially reported 0.4%.
Business investment, the agency said, grew 2.6% in the third quarter, the fastest pace seen since the fourth quarter of 2017, while household spending accelerated to 0.4%. Housing investment rose 3.2%, the highest gain seen since the first quarter of 2012.
“This may mark the return to Canadians spending more as they feel better about home prices,” said Adam Button, chief currency analysts at Forexlive.
In a separate release, Statistics Canada said Canadian producer prices rose by 0.1% in October, on higher energy and petroleum prices.
Reporting by Kelsey Johnson, additional reporting by Jeff Lewis, Allison Martell and Fergal Smith in Toronto Editing by Chizu Nomiyama
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