Canada GDP Growth Slows to 0.5% in Q3

The Canadian economy grew 0.5 percent quarter-on-quarter in the third quarter of 2018, following a 0.7 percent expansion in the previous period. The slowdown was mainly due to lower household spending. Expressed as an annualized rate, the GDP advanced 2.0 percent, easing from a 2.9 percent growth in the second quarter and in line with market expectations.

Household expenditure rose 0.3 percent, slowing from a 0.6 percent expansion in the previous period, attributable to outlays for durable goods (-0.7 percent), as motor vehicles purchases (-1.6 percent) fell for the third straight quarter. On the other hand, a 1.4 percent rise in outlays for semi-durable goods pushed overall goods spending to 0.2 percent. Household spending on services slowed to 0.3 percent, after expanding 0.8 percent in the second quarter.

Investment in housing dropped 1.5 percent, as investment in new residential construction fell 4.7 percent, the largest decline since the second quarter of 2009. Also, renovation outlays went down (-2.0 percent). Meanwhile, ownership transfer costs rebounded (7.1 percent), after decreasing for two quarters.

Business gross fixed capital formation fell 1.3 percent, following six consecutive quarterly increases, mainly due to a decrease in investment in engineering structures (-2.3 percent), which was partly offset by investment in non-residential buildings (1.3 percent). Additionally, engineering structures dropped due to a deceleration of investment in the oil and gas sector.

Machinery and equipment investment by businesses decreased 2.5 percent, the sharpest drop since the third quarter of 2016. Main contributions to the decline were: aircraft and other transportation equipment (-51.0 percent); industrial machinery and equipment (-2.1 percent); and furniture, fixtures, and prefabricated structures (-2.3 percent).

Business inventory accumulation eased to CAD 6.9 billion from CAD 13.2 billion in the prior period. Retailers reduced inventories, with motor vehicle inventories falling by CAD 4.1 billion in the third quarter.

Manufacturers' inventory increased for both durable and non-durable goods, while wholesalers continued to build up stocks, but at a slower pace. The economy-wide stock-to-sale ratio increased to 0.82.

Imports went down 2.0 percent, with imports of refined petroleum products falling 27.2 percent. The drop in petroleum imports coincided with increased domestic production following the completion of maintenance work at certain Canadian refineries that had reduced output in the second quarter. In addition, purchases of aircraft and other transportation equipment and parts decreased 22.0 percent. Imports of service fell 2.5 percent, mainly on lower demand for commercial (-3.1 percent) and travel (-2.7 percent) services.

Exports increased 0.2 percent in the third quarter, slowing from a 3.1 percent growht in the second quarter. Total goods exports rose 0.4 percent, boosted by higher sales of shipments of metal ores and non-metallic minerals (27.6 percent), reflecting the resumption of operations at mines affected by work stoppages in the second quarter. Exports of services declined 0.8 percent.

Canada GDP Growth Slows to 0.5% in Q3

Statistics Canada | Stefanie Moya |
11/30/2018 2:06:24 PM