Pace of growth slows in third quarter: Statistics Canada

By Staff, with files from The Canadian Press | November 30, 2018 | Last updated on November 30, 2018
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The pace of economic growth in Canada slowed in the third quarter as business investment spending moved lower and the growth in household spending slowed, Statistics Canada said Friday.

The Canadian economy grew at an annualized pace of 2.0% in the third quarter compared with 2.9% in the second quarter, matching the expectations of economists, according to Thomson Reuters Eikon.

The overall move came as spending on non-residential investment in buildings and engineering structures fell 1.3%, as investment in the oil and gas sector slowed. Machinery and equipment investment by businesses fell 2.5%.

Meanwhile, the growth in household spending slowed to 0.3% in the quarter, compared with 0.6% in the second quarter. The drop came as spending on durable goods fell 0.7%, with spending on vehicle purchases falling 1.6%.

Total residential investment also fell 1.5% as spending on new home construction fell 4.7%, the largest decrease since the second quarter of 2009. Renovation spending fell 2.0%, while ownership transfer costs rose 7.1%.

The quarter ended on a weak note as real gross domestic product edged down 0.1% in September. Statistics Canada noted it was the first move lower after seven consecutive months of growth.

The agency attributed September’s dip to lower output across all goods-producing industries, which slipped 0.7%. Services industries edged up 0.2%.

In its fall monetary policy report, the Bank of Canada had forecast growth at an annual rate of 1.8% in the third quarter.

The Bank of Canada raised its key interest rate target in October to 1.75%, its highest level in about a decade.

Economists generally do not expect the central bank to change the rate at a scheduled announcement next week, but expectations are for another rate increase in January.

CIBC Capital Markets chief economist Avery Shenfeld called the quarter “mediocre” with some “troubling details” on business investment and the September decline.

“These aren’t the sort of numbers that back a rate hike in December, and we’ll need to see much better results for October, and at least a hint of good news on oil, to support our call for a January hike,” he said in a research note. “Risks are growing towards pushing that next hike further into 2019.”

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Staff, with files from The Canadian Press

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