3rd Quarter Growth aiding the end of Canada's Recession
Why 4th-quarter outlook is brighter
Canada's economy expanded in third quarter, marking recession's end, bolstered by domestic demand
Tavia Grant
Globe and Mail Update Published on Monday, Nov. 30, 2009 8:35AM EST Last updated on Monday, Nov. 30, 2009 1:25PM EST
The Canadian economy is creeping out of recession, with September's growth spurt boding well for fourth quarter activity.
The country's gross domestic product grew at an annualized 0.4 per cent in the third quarter, Statistics Canada
said Monday, the first growth in a year and a sign the recession is over.
The recent recession will be characterized as shorter, and sharper, than previous downturns, and most economists expect the return to recovery will be gradual.
“September was finally starting to show some signs of life,” said Pedro Antunes, director of national forecasting for the Conference Board of Canada. “Given September, the fourth quarter will kick up well. But if we look at 2010 as a whole, it is going to be a bumpy recovery” as private sector spending remains sluggish.
The Canadian dollar (0.960.011.21%) strengthened Monday, from Friday's close of 94.20 cents.
Domestic demand is lifting Canada out of recession. Consumer spending on goods such as cars and furniture, a pickup in machinery and equipment investments and government spending on engineering projects all contributed to the quarterly gain.
“With final domestic demand and government spending advancing at very strong clip, there appears to be significant domestic momentum in Canada,” said Millan Mulraine, economics strategist at TD Securities.
The third-quarter growth is considerably less than the Bank of Canada's projection for 2-per-cent expansion, and weaker than the 0.6 per cent that economists polled by Reuters had expected.
The bigger picture, though, is “that the Canadian economy is erratically grinding out of recession, led by broad-based gains in domestic spending,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. “A relatively muted recovery remains the dominant theme.”
The country's economy grew at a much more sluggish pace in the third quarter than the U.S., which expanded 2.8 per cent, and behind the pace of most other major economies