Tuesday, September 26, 2023
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After brief contraction, Canada’s economy grew again in third quarter

after brief contraction canadas economy grew again in third quarter

Canada’s gross domestic product expanded by 1.3 per cent from July to September, as the end of some pandemic restrictions helped boost consumer spending and exports.

Statistics Canada said Tuesday that the total value of all goods and services was $2.093 trillion in the quarter, seasonally adjusted at an annualized rate.

That’s up from $2.066 trillion in the previous three-month stretch, when the economy contracted for the first time since the early days of COVID-19.

A jump in consumer spending was the biggest reason for the overall increase, with households spending more on semi-durable goods (up 14 per cent) as well as services (up six per cent).

Semi-durable goods are items that last longer than short-term consumables like food, but not as long as durable goods such as appliances.

A good example of a semi-durable good would be an item of clothing, and spending on those increased by almost 27 per cent during the quarter. Spending on footwear also surged by more than 30 per cent, which means Canadians are now spending more on clothes and shoes than they were before the pandemic.

There was also a surge in spending on services that Canadians had been delaying during the pandemic. 

Things like transportation services, which includes flight tickets, rose by more than 40 per cent, while spending on recreation and cultural activities went up by 26 per cent. 

Spending on food, beverages and accommodation went up by 29 per cent, while personal grooming services, such as haircuts, jumped by more than a third.

Good but not great

TD Bank economist Sri Thanabalasingam said that overall the numbers were good, but they could have been even better were it not for ongoing supply chain issues with big-ticket items.

“Hampered by global supply chain disruptions, consumers spent less on durable goods, specifically automobiles, and businesses invested less in machinery and equipment,” he said. “If not for supply shortages, GDP growth could have been even stronger in the third quarter.”

Ima Sammani, a market analyst with foreign exchange firm Monex, said that the data was generally positive, but largely redundant due to events that have happened since the end of September.

“Despite the significantly stronger GDP print than expected, the market reaction was relatively mild given … new concerns around the growth momentum have arisen following the discovery of the omicron variant,” she said.

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