#Canada #statcan #futures #trading #GDP
Canada’s economy is gearing down rapidly after stronger-than-expected growth in the third quarter, potentially giving the central bank leeway to slow its interest rate increases.
Real gross domestic product (GDP) rose 0.7% in the third quarter, the fifth consecutive quarterly increase. Growth in exports, non-residential structures, and business investment in inventories were moderated by declines in housing investment and household spending. Final domestic demand, composed of expenditures on final consumption and capital investment, edged down 0.2%, following a 0.6% increase in the second quarter, Statistics Canada said on Tuesday.
Exports (+2.1%) increased for the second consecutive quarter, led by crude oil and bitumen, and farm and fishing products. Prices of crude oil and bitumen fell in the quarter, while volumes increased significantly. Higher yields in wheat contributed to greater exports of farm products in the quarter.
Imports fell 0.4% in the third quarter, reflecting widespread declines in energy products, including crude oil, natural gas, and nuclear fuel.
Accumulation of non-farm inventories was $46.8 billion in the third quarter, a record high in additions to inventory. Inventories expanded among the manufacturing, wholesale trade, and retail trade sectors. Manufacturers experienced widespread inventory accumulation, while the retail and wholesale trade sectors recorded higher stocks of motor vehicles as the stock-to-sales ratio for this commodity continued to move upward after reaching historic lows in 2021. Other durable categories in wholesale showed strong accumulation as well, namely machinery and building materials.
The economy-wide stock-to-sales ratio rose to 0.868 in the third quarter of 2022, up from 0.836 in the second quarter. The continued strong pace of inventory accumulation resulted in the highest level of economy-wide stock-to-sales since the second quarter of 2020, when the ratio was 0.968.
Housing investment (-4.1%) declined for the second consecutive quarter, coinciding with higher interest rates. Renovations (-6.6%) were down for the second consecutive quarter, and resale activities (-13.8%) were down for the third consecutive quarter. These declines were partly offset by new construction (+2.4%), which rose after four quarters of decreases. Ontario, the western provinces, and Nunavut recorded increases in new housing construction, while the Atlantic provinces and Quebec posted decreases. On a nominal basis, housing investment represented 8.2% of GDP, a decline from the more than double digit proportion from early 2021.
The GDP implicit price index declined 1.4% in the third quarter, the first decline since the second quarter of 2020. Consequently, nominal GDP fell 0.7%, following a 4.0% increase in the second quarter of 2022.
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