By Todd Hirsch
Senior Economist, ATB Financial
November 30, 2010
After a big boom in activity at the beginning of 2010, it seemed that the country’s economy started to moderate, with slower growth as the year progressed. That slowing trend became even more pronounced during the months of July to September.
According to a Statistics Canada release this morning, the national economy expanded by only 0.3% in the third
quarter of 2010, compared to the second quarter. The annualized rate of growth (that is, if the same pace continued for 12 months) was 1.0% in the third quarter. This comes after annualized growth rates of 5.6% in the first quarter, and 2.3% in the second quarter. The biggest factors contributing to the slowdown in GDP growth were lower exports (-1.3%) and lower investment in housing (-1.3%). Neither of those came as a surprise; with the US economy struggling with high consumer debt levels, exports to our largest trading partner have sagged over the middle part of the year. And the national housing market has shown strains as well. Manufacturing, mining and the public sector main sources of growth in the third quarter.
The GDP growth report came in somewhat below a consensus of economists’ forecasts of +1.5%. Given the apparent slowdown in the Canadian economy, the Bank of Canada will certainly pass on any rate increase in December, and could now delay rate
increases until mid-2011.