Calgary Alberta Mortgage and Real Estate News

Canada’s economic growth in the fourth quarter was the slowest in more than three years, as manufacturers sold their inventories to meet demand and consumer spending eased.Gross domestic product growth in the world’s eighth- largest economy eased to an annualized 1.4 percent rate between October and December, from a revised 2 percent pace in the third quarter, Statistics Canada said today in Ottawa. Economists predicted fourth-quarter growth would slow to 1.2 percent from an initially reported 1.7 percent rate, according to the median of 27 estimates in a Bloomberg News survey.

The Canadian economy experienced what Bank of Canada Governor David Dodge called a “mild” slowdown at the end of last year, caused by a strong currency and weaker U.S. demand. An anticipated turnaround this year may keep the central bank from lowering interest rates to bolster demand, economists say. The economy rebounded in December to grow at its fastest pace in a year, Statistics Canada also said today.

“We saw some weakness come through on the consumer side and we had some notable slowdown in some of the manufacturing categories” last year, Carolyn Kwan, an economist at Scotia Capital Inc. in Toronto, said before today’s report. “Our outlook is relatively positive” for coming months, she said.

The next decision for the central bank, which has left the benchmark lending rate at 4.25 percent since last May, is on March 6. Canadian interest-rate futures due in June show investors don’t expect a change in the 4.25 percent rate. The yield on the June bankers’ acceptance contract was 4.24 percent yesterday on the Montreal Exchange.

December GDP

On a monthly basis, the economy grew 0.4 percent in December, up from a revised pace of 0.3 percent in November. Economists had predicted output to grow 0.5 percent during the month, from initially reported November growth of 0.2 percent.

Canada’s economy grew 2.7 percent during all of 2006 from the previous year, below the 2.8 percent pace at which the central bank says the economy can grow without sparking inflation.

The central bank predicted in January that output would grow by 1.5 percent in the fourth-quarter and 2.7 percent for the whole year, down from a pace of 2.9 percent in 2005.

Consumer spending on goods and services, which makes up almost 60 percent of GDP, advanced at an annualized 3.1 percent rate between October and December, down from 5.1 percent in the third quarter. The central bank predicts consumer spending growth will wane in coming years, making up 60 percent of GDP growth in 2008, down from more than 80 percent in 2006.

Business Investment

Non-farm businesses drew down C$748 million ($636 million) in inventories during the quarter to meet demand, deducting almost a full percentage point from growth during the three-month period, the statistics agency said.

Investment by businesses, which includes spending on residential construction as well as machinery and equipment, advanced 3.9 percent, from the third quarter’s 3.2 percent annualized pace. Non-residential construction rose 10.5 percent, from 10.4 percent in the third quarter.

Exports rose 4.8 percent in the fourth quarter, while imports, a deduction from the GDP measures, declined 0.6 percent.

Government spending slowed to 1.8 percent in the fourth quarter, from 2 percent in the prior three months.

This entry was posted on Friday, March 16th, 2007 at 10:34 am and is filed under Canada Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.