The recession is making its way out of the Canadian landscape, but it's an agonizingly slow process.
Figures released this morning by Statistics Canada noted that annualized fourth-quarter growth in the Canadian economy remained disappointingly weak rising only 0.6% at an annualized rate. This represented little change from the 0.7% increase recorded in the third quarter which was revised up slightly from the 0.6% originally reported. Expectations going into the Q4 GDP report were right in line with the reported modest increase.
Though the overall growth rate was little changed between the fourth and the third quarters, the composition of output was much more favourable in Q4. Specifically, the inventory component subtracted a sizable and much larger-than-expected 2.6 percentage points from Q4 growth which reversed the 2.5-percentage-point addition in Q3. This subtraction from growth offset a stronger-than-expected 2.6% increase in final domestic demand which was up sharply from the 0.9% increase recorded in Q3. Unexpected Q4 strength also emerged in net exports which contributed 0.7 percentage points to quarterly growth after subtracting 2.9 pp in Q3. Today’s report indicated that exports rose an annualized 1.2% in the quarter which was in contrast to the monthly releases that were implying a decline of 2.0%.
Also released this morning was the December GDP report which indicated a decline of 0.2% following gains of 0.3% and 0.1% in November and October, respectively. The decrease was in line with expectations following earlier reports that indicated declining activity in manufacturing, retail and wholesale trade which was confirmed in today’s report with these sectors showing dropping 1.8% (manufacturing), 1.6% (retail) and 0.6% (wholesale).
