Canada economic growth slows to 1pc in Q3

OTTAWA: Canada’s economic growth slowed in line with expectations to 1.0 per cent in the third quarter, the national statistical agency said on Friday.

Household and government spending were up, but lower investment and exports along with a slower accumulation of business inventories dampened growth, said Statistics Canada.The third quarter reading follows two quarters of stronger but still modest growth -- 2.2 per cent revised upward in the second, and 2.0 in the first.

“It looks like the Canadian economy took a summer holiday and that stagnation continued into the fall semester,” Desjardins analyst Royce Mendes said in a research note.Friday’s GDP update comes ahead of a Bank of Canada interest rate announcement next month that analysts expect will be a fourth cut in a row.

The bank, like its American and European counterparts, had hiked rates to a two-decades high to tackle soaring inflation in the post-pandemic economy, but has begun cutting them amid cooling price increases.As 2024 comes to a close, forecasts show a continued slowdown in the Canadian economy.

CIBC Economics analyst Andrew Grantham said growth in the fourth quarter, based on early tracking of data, is likely to also come in at 1.0 per cent -- half of the central bank’s projection.

“A weaker trend in activity,” he said, “is supportive of a 50 basis point cut at the (bank’s) December meeting.” However, he added, upcoming jobs data will be crucial in the final determination.

According to Statistics Canada, household spending in the third quarter rose on new trucks, vans and sport utility vehicles, as well as for financial services, while spending on accommodation and food services fell.

Government expenditures increased for a third consecutive quarter, while business spending on machinery and equipment decreased but rose on research and development and mineral exploration, the agency said.Exports declined more than imports.Home resales were up in the quarter, but spending on new construction and renovations fell, amid a housing crunch.