Latest GDP figures show Canada’s economy continues to grow, but signs of slowdown are everywhere

Canada’s economy expanded slightly in September, with the country’s gross domestic product rising 0.7% in the third quarter.

Statistics Canada reported on Tuesday that exports from goods-producing industries led the way in the quarter, offsetting output from the services sector which was essentially flat.

Oil and gas extraction rose 1.8% in September, led by a surge in oil sands extraction. The country set a high line for crude bitumen production during the month, ahead of the record output recorded in July and August.

Agricultural production also surged in the month, with agricultural output rising 0.7%. Canadian farms have now seen production rise for 12 consecutive months after plunging due to drought conditions in Western Canada last year.

« The increase in production was largely due to better growing conditions, leading to higher than expected yields, » the data agency said.

Spending slowdown

Conversely, the manufacturing sector fell 0.1%, as did retail and wholesale trade.

Household spending fell 0.3%, the first drop since the second quarter of 2021. Consumer spending fell because « instead of spending, households continued to save their money for rainy days » said Desjardins economist Royce Mendes.

The household savings rate fell from 5.1% to 5.7% previously. For comparison, before the pandemic, in 2019, the household savings rate was 2.5%.

« It looks like Canadians are bracing for what could be a bad run for the economy in 2023, » Mendes said.

Households spent as much as they could during the quarter, in part because wage gains seen earlier in the pandemic are starting to slow.

On a quarterly basis, nominal employee compensation increased by 1.2%.

« This is the weakest growth in wages and salaries since the second quarter of 2020, when compensation fell sharply, » the data agency said.

Overall, Mendes says the GDP numbers « suggest that economic momentum lost momentum at the start of the fourth quarter. »


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