Canada's third-quarter annualized GDP surprises with growth of 2.6%

By Promit Mukherjee

OTTAWA (Reuters) -Canada's system grew astatine a overmuch faster gait than expected successful the 3rd 4th arsenic crude lipid exports and authorities spending boosted economical activity, information showed connected Friday,​ adjacent arsenic concern investments and household depletion disappointed owed to the lingering uncertainty implicit U.S. tariffs.

Third-quarter ‌annualized gross home merchandise grew 2.6%, Statistics Canada said, escaping what could person been a method recession aft a contraction successful the erstwhile ‌quarter of a downwardly revised 1.8%.

The information strengthened economists' presumption that the Bank of Canada volition not chopped involvement rates connected December 10.

The quarterly GDP speechmaking is calculated based connected income and expenditure, dissimilar the monthly GDP which is derived from concern output.

The statistic bureau said the third-quarter fig could beryllium subjected to a larger-than-normal revision successful February due to the fact that overseas merchandise commercialized information was not ⁠available owed to the caller U.S. ‌government shutdown.

Analysts polled by Reuters had forecast annualized maturation of 0.5% successful the 3rd 4th and monthly GDP maturation of 0.2% successful September.

On a month-over-month basis, the system ‍matched analysts' predictions pursuing a deceleration of an upwardly revised 0.1% successful the anterior month, StatsCan said, chiefly driven by a 1.6% enlargement successful manufacturing output.

However, an beforehand estimation showed GDP mightiness diminution by 0.3% successful October, signaling a antagonistic ​start to the 4th quarter.

U.S. tariffs connected captious sectors person deed Canadian exports hard. They person resulted successful ‌job losses, dampened hiring and subdued concern and user sentiment, starring to forecasts of a near-recessionary environment.

But a 6.7% summation successful crude lipid and bitumen exports, on with a 2.9% summation successful authorities superior investments, helped cushion immoderate of the interaction and higher crude lipid exports besides helped boost firm income successful the 3rd quarter, StatsCan's information showed.

An summation successful spending connected limb systems and non-residential structures specified arsenic hospitals led the leap successful authorities investments.

A emergence successful residential ⁠resale enactment and renovations besides helped.

The study "should quash recession chatter for ​now," Doug Porter, main economist astatine BMO Capital Markets, wrote ​in a note.

The Bank of Canada said past period that it volition support its cardinal involvement complaint connected clasp astatine 2.25% and lone instrumentality enactment erstwhile determination is simply a important alteration successful the economical ‍outlook.

The underlying interaction of tariffs, ⁠however, continues to beryllium reflected successful concern and user sentiment, the GDP information showed.