Nova Scotia Journal

Tuesday, November 29, 2022

The Canadian economy grew again in the third quarter

Canada's economy grew

Key Takeaways:

  • Spending on services and a wide range of goods has rebounded strongly.
  • From July to September, Canada’s GDP increased by 1.3%, as the lifting of some pandemic restrictions boosted consumer spending and exports.

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

This is up from $2.066 trillion in the previous three months when the economy contracted for the first time since COVID-19’s beginning. The biggest reason for the overall increase was increased consumer spending, with households spending more on semi-durable goods (up 14%) and services (up to six percent).

Semi-durable goods last longer than short-term consumables such as food, but not as long as durable goods such as appliances. Clothing is an excellent example of a semi-durable interest, and spending on it increased by nearly 27% during the quarter. Also, spending on footwear increased by more than 30%, implying that Canadians are now spending more on clothing and shoes than before the pandemic.

There was also an rise in spending on services that Canadians had postponed due to the pandemic.

Transportation services, including flight tickets, increased by more than 40%, while recreation and cultural activities increased by 26%.

Spending on food, beverages, and lodging increased by 29%, while personal grooming services, such as haircuts increased by more than a third. Overall, according to TD Bank economist Sri Thanabalasingam, the numbers were good, but they could have been even better if not for ongoing supply chain issues with big-ticket items.

“As a result of global supply chain disruptions, consumers spent less on durable goods, particularly automobiles, or businesses invested less in machinery or equipment,” he explained. “GDP rise could have been even stronger in the third quarter if not for supply constraints.”

According to Ima Sammani, a market analyst with the foreign exchange firm Monex, the data was usually positive but largely redundant due to events as the end of September.

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

Source: CBC News

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