Canada’s economy grew for the first time in four quarters between July and September, signaling the country’s first recession since 1992 has ended.
Gross domestic product expanded at a 0.4% annualized rate in the third quarter, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News forecast a 1% annualized gain, based on the median of 19 responses. The second-quarter decrease, initially reported at 3.4%, was revised to a 3.1% annualized drop.
To revive demand, Prime Minister Stephen Harper is planning a record $55.9-billion deficit and Bank of Canada Governor Mark Carney plans to keep his main lending rate at a record 0.25% through June. Carney has said the recovery may take longer than from past recessions, with unemployment weighing on consumer spending, lower business investment and a strong currency that will hamper exports.
The loonie appreciated 0.4% to $1.0575 per U.S. dollar at 9:04 a.m. in Toronto, from $1.0618 on Nov. 27. One Canadian dollar buys 94.56 U.S. cents.
The third-quarter figure is lower than the Bank of Canada’s prediction for 2% annualized growth. Carney said last month the growth may come in "softer" than his formal prediction, adding the "profile" for a strengthening recovery next year remains intact.
Canada’s economy will shrink 2.4% this year, the bank predicts, then grow 3% next year led by consumer spending. The economy won’t return to full output until the third quarter of 2011 and inflation will remain below 2% until then, the bank says.
September Gain
The third-quarter expansion was led by a 2.1% quarter-over-quarter gain in capital expenditures, the first increase in a year. Government spending rose 1.2% and consumer spending rose 0.8%, returning to its pre-recession level.
On a monthly basis, the economy grew 0.4% in September, the first gain in three months and in line with the median estimate of 17 economists surveyed by Bloomberg News.
In a separate report, Statistics Canada said that factory prices fell 0.3% in October from September, and manufacturers’ raw materials costs increased 2.5%. Economists predicted factory prices would rise 0.4%, and material costs would gain 3%, according to the median estimates of economists.
