Daily News

View All News

Canada’s GDP expands in Q3 after two quarters of contraction

December 01, 2015

Canada’s gross domestic product rose 0.6% in the third quarter, following two consecutive quarterly declines, Statistics Canada reported today. Expressed at an annualized rate, real GDP expanded 2.3% in the third quarter. By comparison, real GDP in the US rose 2.1%.

Statistics Canada reported second-quarter GDP fell 0.3% on an annualized basis and first-quarter GDP contracted 0.7%.

The quarterly growth was driven by increased international demand for Canadian goods and services as exports increased 2.3% following a 0.5% gain in the second quarter, according to Statistics Canada.

Compensation of employees edged up 0.2% in the third quarter following a 0.3% gain in the second quarter. Wages and salaries in goods-producing industries declined by 1.2%, while wages and salaries in service-producing industries rose 0.7%.

“The economic impact of lower oil prices is likely to prove longer lasting and further reaching than was originally expected,” Diana Petramala, economist at Toronto-Dominion Bank, told MarketWatch.

Separately, the Royal Bank of Canada’s manufacturing purchasing managers’ index posted a slightly slower downturn in overall business conditions than the survey-record low seen during October. The index rose to a reading of 48.6 in November from a record low of 48.0 in October. However, it remains inside contraction territory and lower than the 49.5 average for 2015.

“With another reading in contraction territory, the RBC PMI is signaling that Canada’s manufacturing sector continues to face headwinds from weak commodity prices, particularly for oil,” said Craig Wright, senior VP and chief economist, RBC.

The RBC PMI is a monthly survey conducted in association with Markit, a financial information services company, and the Supply Chain Management Association. It is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 industrial companies.