Economy showing steady growth
OTTAWA — The Canadian economy has edged ahead for five straight months, a steady but not necessarily stellar performance.
All told, though, those gains are pointing to a respectable end-of-year tally, with just one month missing from the fourth-quarter trend.
Growth was 0.2 per cent in November, led by increases in oil and gas extraction, along with the retail sector, Statistics Canada said Friday. But closely watched — and often unpredictable — manufacturing and construction output was weak during the month.
The overall increase in gross domestic product was in line with forecasts, while still below the previous month’s pace of 0.3 per cent.
“The three-month trend in growth is now running at a nifty 3.8 per cent annualized clip,” said Douglas Porter, chief economist at BMO Capital Markets.
“However, we look for a setback in next month’s report, as the brutal December weather — notably the ice storm in Ontario — is expected to produce a GDP decline for that month.”
GDP in Canada grew by 2.3 per cent in the first-quarter of 2013, slowing to 1.6 per cent the following quarter before a surprisingly strong 2.7 per cent increase between July and September.
The December and finalquarter growth numbers will come out on Feb. 28.
The Bank of Canada is expecting October-to-December growth of 2.5 per cent, but many economists are looking for a slightly better performance. The United States, meanwhile, has already reported a 3.2 per cent rise in GDP in the fourth quarter.
“Though not matching the growth fireworks stateside, Canada’s economy has shown improved traction in recent months, after a soft showing in the first half of 2013 due to floods and other dislocations,” said economist Peter Buchanan, at CIBC World Markets.
With “improved momentum on the goods side, which is levered to an improving economy stateside, we are raising our forecast for Q4 GDP growth to 2.9 per cent from 2.7 per cent.”
Canadian growth for 2014 should come in at 2.5 per cent, according to the Bank of Canada, following an estimated 1.8 per cent advance last year.
Policy-makers are expecting a strong recovery in the U.S. and, to a lesser degree, in Europe to help lift our economy. However, the Conference Board of Canada on Friday tempered its outlook for the economy, saying growth in the first half of 2014 will be “only modest.”
The board said its composite leading index increased 0.3 per cent in December, matching the gains in October and November.
“The modest gains in the index in recent months, combined with the uneven performance of individual components, suggest that the economy has not yet begun to feel the benefits of strengthening U.S. demand,” said Philip Cross, who is responsible for the Conference Board’s new index, which tracks the same indicators — plus additional components — as the now-discontinued monthly report by Statistics Canada.