Exports help pull Canada out of recession

OTTAWA — Canada’s economy turned the corner from recession to growth in the third quarter of the year, but there are still troubling signs ahead as the energy sector continues to pull down overall output.

Gross domestic product grew by 2.3 per cent between July and September, on an annualized basis, after two consecutive quarterly declines, Statistics Canada said Tuesday.

The rebound was helped in part by a surprisingly big jump in exports — offsetting still-weak business investment.

Private-sector economists had forecast annualized growth of 2.4 per cent in the most recent three-month period. In first and second quarters of this year, GDP declined by a revised 0.7 and 0.3 per cent, respectively, a slight improvement from previous estimates by the federal data agency. The third-quarter strength was tempered by a 0.5 per cent decline in September, “primarily as a result of the declines in mining, quarrying, and oil and gas extraction and — to a much lesser extent — manufacturing,” the agency said.

Even so, the Canadian economy performed at a better pace in the quarter than the United States, which posted an annualized increase in GDP of 2.1 per cent.

“It’s (comparing) apples to apples. But, if we look at the whole string of apples over the past year, their apples are much more impressive,” said Douglas Porter, chief economist at BMO Capital Markets. “The U.S. has had decent growth of more than two per cent, and we’ve struggled to even grow by one per cent over the past year.”

While the third quarter marked a resumption in growth in Canada following a technical recession — described as two straight quarterly contractions — in the first half of 2015, the September reading was not an encouraging sign for the fourth quarter of this year. That slowdown could give pause to any near-term increase in interest rates by the Bank of Canada, which today will announce a decision on its key borrowing level — currently at 0.5 per cent.

“The third quarter came in like a lion but went out like a lamb, as strong numbers early on gave way to a drop in September,” said Avery Shenfeld, chief economist at CIBC World Markets.