Canadian economy pulls out of recession

Dec 1 Canada pulled out of recession in the third quarter as an acceleration in exports and increased spending in the consumer and housing sectors revived growth, data from Statistics Canada showed on Tuesday. The GDP received boosts from improved performances in exports and household consumption, the federal agency says.

The economy’s struggles – led by the deep, negative impact of stubbornly low oil and commodity prices – have forced experts to repeatedly downgrade their growth forecasts for Canada.

“Because the primary driver of the weakness in the September figures was a one-off factor, I don’t see the Bank of Canada responding with any policy action”, said CIBC Capital Markets economist Nick Exarhos.

The economy expanded at an annual pace of 2.3 per cent in the three months that ended in September, slightly below economists’ expectations of 2.4 per cent growth.

Helped by a low Canadian dollar that makes Canadian products more attractive in foreign markets, exports of goods rose 2.7 per cent in the quarter, led by strong increases in cross-border shipments of motor vehicles and parts.

“September’s 0.5-per-cent drop in monthly GDP was heavily distorted by disruptions at one oil facility, helping mining/energy dive by more than 5 per cent. Elsewhere, however, the news was still not great, with a moderate 0.3-per-cent rise in retail GDP running up against flat construction and a 0.6-per-cent drop in manufacturing”, he said.

Results for the first and second quarters were revised, and suggested the economy didn’t shrink as much as first reported. They predicted a 1.2% increase in real GDP – a common measure of economic growth – for 2015 as a whole, down from an April estimate of 2%.

Policymakers previously cut their benchmark rate twice this year in response to the economic fallout from the oil-price drop that slashed about 50 per cent off the previous trading levels.

The output contraction for September lagged Bloomberg economist forecasts that it would be little changed.