Canada’s economy picked up speed in the third quarter, growing faster than anyone expected. New data shows the economy grew 2.6%, mainly thanks to stronger crude oil exports and higher government spending. This helped Canada avoid a possible recession after last quarter’s decline.
Even with the good news, business investment and household spending stayed weak, mostly because of uncertainty around U.S. tariffs.
Economists now believe the Bank of Canada is unlikely to cut interest rates on December 10, since the economy showed better-than-expected strength.
Manufacturing was a bright spot, growing 1.6%, but things may cool off again. An early estimate suggests GDP could drop 0.3% in October, hinting at a slower start for the fourth quarter.
U.S. tariffs continue to hurt Canadian exports and confidence, but a 6.7% jump in crude oil exports and more government investment—especially in hospitals and defence—helped keep the economy moving.
Housing also helped, with more resale activity and renovation spending.
Still, business investment didn’t grow at all, and household spending dipped slightly. New home construction fell by 0.8%.
After the report, the Canadian dollar inched up, and government bond yields also rose.
As one economist put it, the latest numbers “should quiet recession talk for now.”
(Source: Reuters)
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