Gross domestic product expanded at a 0.4 percent annualized rate in the third quarter, Statistics Canada said. The second-quarter decrease, initially reported at 3.4 percent, was revised to a 3.1 percent annualized drop.
To revive demand, Prime Minister Stephen Harper is planning a record C$55.9 billion deficit ($52.9 billion) and Bank of Canada Governor Mark Carney plans to keep his main lending rate at a record 0.25 percent through June. Carney has said the recovery may take longer than from past recessions, with unemployment weighing on consumer spending, lower business investment and a strong currency that will hamper exports.
The third-quarter figure is lower than the Bank of Canada’s prediction for 2 percent annualized growth. Carney said last month the growth may come in softer” than his formal prediction, adding the profile” for a strengthening recovery next year remains intact.
The third-quarter expansion was led by a 2.1 percent quarter-over-quarter gain in capital expenditures, the first increase in a year. Government spending rose 1.2 percent and consumer spending rose 0.8 percent, returning to its pre-recession level. On a monthly basis, the economy grew 0.4 percent in September, the first gain in three months.
The 1.3 percent gain in retailing was blunted by a 0.4 percent drop in construction and a 0.2 percent decline in manufacturing.
Exports rose for the first time in nine quarters in the July-through-September period, rising 3.6 percent. Imports rose 8 percent.
Canada’s dollar appreciated against the U.S. dollar by as much as 19 percent this year, making the country’s shipments of automobiles, lumber and metals to the U.S. less competitive and restraining inflation by making imports cheaper. The currency continued to gain even after the central bank began to say in June it was concerned about the effects of its rise.