ⓒ CBC News
Canada’s economy expanded at a slower pace than anticipated in the third quarter of 2024, according to Statistics Canada. While the annualized growth rate reached one per cent, fueled by increased household and government spending, this figure fell short of the Bank of Canada’s projection of 1.5 per cent.
The increase in consumer spending was driven by purchases of vehicles, particularly trucks, vans, and sports utility vehicles, along with a rise in spending on financial services. However, this was partially offset by a decrease in spending on food services and accommodation.
Government expenditure contributed positively to the overall growth, marking the third consecutive quarter of increased spending. Despite this, the GDP per capita experienced a decline of 0.4 per cent, continuing a trend of six consecutive quarterly decreases.
A significant factor contributing to the slower-than-expected growth was a reduction in business investment, mainly due to decreased spending on machinery, including aircraft. Exports also underperformed, contracting more sharply than imports.
Statistics Canada also revised its second-quarter growth upwards to 2.2 per cent, from a previous estimate of 2.1 per cent. This upward revision, combined with the Q3 data, provides a more nuanced picture of recent economic activity.
The upcoming employment report, to be released early next month, will play a crucial role in informing the Bank of Canada’s decision on the magnitude of an anticipated interest rate cut slated for December 11th. This rate cut decision will be the culmination of the Bank’s monetary policy for the year. Analysts at CIBC Capital Markets suggest that the current economic indicators support a 50 basis-point reduction.
The economic data released so far indicates a slightly weaker economic trend than initially forecast by the central bank. The upcoming employment figures will ultimately be key in finalizing the interest rate decision.
