Canada’s economy experienced a contraction in this year’s third quarter as the nation’s gross domestic product (GDP) declined an annualized 1.1% between July and September.
The Q3 decline follows an upwardly revised 1.4% annualized increase in the second quarter of the year, said Statistics Canada in releasing the latest economic data.
On a monthly basis, Canada’s GDP decreased 0.3% in the third quarter after growing by 0.3% in the second quarter of the year.
Decreases in international exports and slower inventory accumulation were partially offset by increases in government spending and housing investments.
Canada’s exports of goods and services dropped 1.3% in the third quarter after increasing 1.3% in the second quarter. The leading contributor to the decrease were energy products, which declined 25% in the third quarter after rising 24% in Q2.
On the flipside, imports of goods and services edged down 0.2% in Q3, following a 1.1% increase in this year’s second quarter. That decrease was led by softer imports of clothing and footwear products.
Slower inventory accumulation across Canada in the third quarter put downward pressure on the country’s GDP growth as the nation saw the smallest build-up of inventories in two years.
Offsetting the economic decreases was an uptick in housing investment, which rose 2% in Q3 after five consecutive quarterly declines.
Spending among Canadian households was unchanged in this year’s third quarter following a flat reading in the second quarter.
Higher household spending on services (up 0.3%) was largely offset by declines in spending on non-durable goods (down 0.4%).
Business investment in non-residential structures fell 2% in Q3, led by decreased spending on engineering structures (down 2.5%), which declined for the first time since the first quarter of 2022.
Business spending on machinery and equipment in Canada pulled back 3.8% in the third quarter, following a 4.4% increase in Q2.
And compensation of employees across the country rose 1.3% on a nominal basis in Q3 as average earnings and employment increased slightly.
