Canada GDP Research Brief

GDP inches forward. Canada’s economy grew by a 1.0 per cent annualized rate in the third quarter. With interest rates holding in restrictive territory, GDP growth was down from the 2.2 per cent gain seen in the second quarter and below the Bank of Canada’s estimate of a 1.5 per cent increase. As the Central Bank’s overnight rate fell 125 basis points between June and November to 3.75 per cent, interest rate-sensitive sectors primarily drove economic expansion. Consumption surged by the strongest gain since the pandemic recovery at 3.6 per cent annualized, while residential investment also rose by 3.0 per cent – the first increase in four quarters. In contrast, GDP was hindered by inventories, which subtracted 130 basis points from overall growth. At the same time, non-residential structures and equipment investment fell by 11.3 per cent, which is not ideal given Canada’s ongoing productivity challenges.