GDP grew at an annual rate of 5.4% in the third quarter: StatCan – .

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Inflation hit 4.7% in October, according to StatCan – .


OTTAWA –

The economy rebounded strongly in the third quarter of the year after surging over the previous three months, in a demonstration of what could be in store as concerns over COVID-19 fade and as Canadians are starting to spend again.

Statistics Canada said Tuesday the economy grew at an annual rate of 5.4% in the third quarter of this year, as restrictions related to COVID-19 eased and household spending increased.

The result was a rebound after a contraction in the second quarter that Statistics Canada also said on Tuesday was deeper than it had previously reported.

The quarterly growth in household spending was one of the largest on record. Consumers spent their money in restaurants, bars, hotels and air travel, which jumped 181.9% as more travelers took to the skies.

To offset these skyrocketing numbers, business investment plummeted and consumer spending fell on goods like cars.

TD Senior Economist Sri Thanabalasingam said real domestic product growth could have been even stronger in the third quarter without the global supply chain issues.

But the celebrations were quickly anchored by severe flooding in British Columbia and concerns about a new, possibly more communicable, variant of COVID-19.

CIBC chief economist Avery Shenfled said the Omicron variant, a possible tightening of restrictions and the need for recalls could all affect the next stage of economic recovery,

“A summer lull in COVID worries got Canadians partying, and their spending spree was fun while it lasted,” he wrote in a note, “but we are faced with new concerns over whether a more vaccine-resistant variant could delay the timeframe for further growth.

Statistics Canada said the third quarter ended with a slight 0.1% increase in the economy in September, as large gains in service industries were offset by declines in manufacturing that were in effect. partly slowed down by a global shortage of semiconductor chips.

The agency also said preliminary data suggests the economy grew 0.8% in October to start the last quarter of the year, led by the manufacturing sector.

Statistics Canada said that with this estimate, total economic activity was about 0.5% below the pre-pandemic level recorded in February 2020.

Stephen Brown, senior Canadian economist at Capital Economics, said the deficit is expected to be closed by the end of this year or early next year. He also said the trajectory of the economy is expected to lead the Bank of Canada to raise its key interest rate by mid-2022.

“Certainly we’re coming to the final stages of a recovery here and starting to think about (monetary) policy tightening,” Brown said.

The federal government has already tightened its purse strings in the event of a pandemic. In October, the Trudeau Liberals ended broad benefits for workers and businesses in favor of more targeted support outlined in a bill currently before the House of Commons.

The Parliamentary Budget Officer estimated Tuesday that more targeted rent assistance for still struggling businesses would bring the overall price of the supplement to $ 8.3 billion.

In two other reports, the PBO estimated that the cost of extending pandemic sickness benefits until May would cost $ 373.8 million and $ 554 million to add additional weeks of eligibility to the federal caregiver benefit. natural.

Statistics Canada noted that government transfers fell in the third quarter as employee compensation rose 2.9 percent, one of the biggest increases in the past two decades.

The additional spending outstripped growth in disposable income, which pushed the savings rate down to 11 percent from 14 percent in the second quarter. The savings rate is still well above pre-pandemic levels.

“Households are well prepared for the potential challenges ahead, and there is still plenty of gasoline in the tank to fuel a possible return to the service sector,” wrote Douglas Porter, chief economist at BMO.

This report by The Canadian Press was first published on November 30, 2021

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