The Canadian economy expanded at an annualized rate of one per cent in the fourth quarter as high interest rates weighed on growth, but not enough to push the economy into a recession.
The increase in real gross domestic product follows a decline in the third quarter of 0.5 per cent annualized. Statistics Canada says growth in the fourth quarter was driven by a rise in exports, while housing and business investment both fell.
In December, real GDP was flat as goods-producing industries contracted and Quebec’s public sector workers’ strike weighed on growth.
BMO chief economist Douglas Porter says the economy is “grinding forward” with help from strong U.S. spending trends, which have boosted Canadian exports.
“There’s no debate that growth is nevertheless anemic, especially when cast in per capita terms,” he said in a client note, adding that real GDP per capita is down more than two per cent from a year ago.
The federal agency says outside of 2020, economic growth in 2023 rose at its slowest pace since 2016.
High interest rates have weighed on Canadians’ finances as the Bank of Canada holds its key interest rate at five per cent, the highest it’s been since 2001.
Households continue to renew their mortgages at higher rates, which is causing a pullback in consumer spending and a slowdown in sales for businesses.
Thursday’s report says while consumer spending was up for the quarter, it continued to decline on a per capita basis as the country experiences strong population growth.
A preliminary estimate suggests real GDP grew by 0.4 per cent in January.
The Bank of Canada has signalled that it’s next move is most likely a rate cut as inflation eases and higher rates dampen economic growth.
Canada’s annual inflation rate ticked down to 2.9 per cent in January amid a broad-based slowdown in price growth.
Most economists expect the central bank to start lowering its key rate around the middle of the year, but a stronger-than-expected economy may reduce the urgency for the central bank to act soon.
“This changes little for the Bank of Canada, as conditions don’t appear to be worsening so there’s no urgency to cut rates,” Porter said. “With growth still well below potential, disinflationary pressure will continue, but it will require ongoing patience.”
The Bank of Canada is set to announce its next interest rate decision on Wednesday.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.