- Daniel Hui, J.P. Morgan Securities
Canada's economy expanded for the first time in three quarters as gains in automotive exports and consumer spending offset the damage from lower oil prices. Gross domestic product expanded at a 2.3% annualized pace from July to September, Statistics Canada reported. Canada's "two-speed" economy – defined by low oil prices and momentum outside of the energy sector – needs until the middle of 2017 to return to full capacity, Bank of Canada Governor Stephen Poloz estimated. The central bank makes its next interest-rate decision later in the day. Exports surged 9.4% in the September quarter driven by automobiles and consumer goods, while imports dropped 2.9%, Statistics Canada said. Consumer spending rose at a 1.8% annualized pace. However, the pace of economic growth was slowed by a 3% decrease in business investment, the third drop in a row. Government expenditures also declined by 1.6%.
Third-quarter growth almost matches the Bank of Canada's most recent forecast for a 2.5% expansion. The central bank also predicted output growth would slow to a 1.5% pace between October and December before accelerating to a rate of 2.7% in the second half of next year.
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