Canada's economy grew at an annual rate of 5.4 per cent in the third quarter, a strong number that should keep the Bank of Canada on track to raise interest rates in the first half of 2022.
The data from Statistics Canada shows that gross domestic product GDP declined at an annual rate of 3.4 per cent between April and June, compared with an initial estimate of a drop of 1.1 per cent. We apologize, but this video didn't load.
Click here to see other videos from our team. Health restrictions were relaxed, just as policy-makers assumed it would, and the recovery from the COVID 19 pandemic regathered momentum as health restrictions were relaxed. They predicted last month that GDP would expand at an annual rate of 5.5 per cent in the third quarter, before it fell to a rate of four per cent over the final three months of the year. Early estimates predict that the extreme flooding in British Columbia this month could be the most expensive natural disaster in Canadian history, making the outlook for the fourth quarter doubtful. The emergence of a new COVID 19 variant also affects the economy's near-term prospects. Economists at Desjardins predicted last week that Canada's economy will likely contract in November, and then rally in December as companies and governments clean up the damage in B.C.
Knowing that the economy has plenty of momentum will make it easier for the near-term uncertainty to come to an end. Household spending on semi-durable goods went up 14 per cent from the second quarter, while spending on services increased by 6.3 per cent, according to Statistics Canada. Spending numbers of that kind shows that there is a lot of consumer demand, justifying both the federal government's decision to end most emergency COVID benefits and the Bank of Canada's decision last month to stop creating money to buy bonds. How omicrons could affect the economy as the disease reaches from Australia to Canada in a widening spread.
Sri Thanabalasingam, an economist at Toronto-Dominion Bank, said the Canadian economy rebounded soundly in the third quarter after floods but see rate hikes on track. There was strong consumption growth as a result of the reopening of provincial economies and the ramp up in vaccines. Exports rallied, led by oil, as the global economy returned to normal after spending more than a year battling various waves of COVID - 19 infections. The second-biggest increase since 2000 was seen in the pay to employees, as they increased by 2.9 per cent, the second-biggest increase since 2000, according to Statistics Canada. The savings rate was 11 per cent, suggesting households still have a healthy cushion, no matter what havoc the new COVID variant brings; the rate dropped from 14 per cent in the second quarter to 14 per cent, but still exceeded pre-pandemic rates by a considerable margin. Douglas Porter, chief economist at Bank of Montreal, said the economy took a bigger step back in recent months after taking a bigger step back earlier in the year. The rebound, combined with the pop in services spending and the strong level of savings cushion, suggests that the economy had solid underpinnings heading into the winter.