OTTAWA — The Canadian economy surged to the strongest growth in eight months in November, regaining momentum lost when it stalled at the end of last summer.
The country’s gross domestic product pulled ahead by a stronger-than-expected 0.4 per cent in November — the best month since March — and the second straight gain following a setback in September.
“It looks like the economy has snapped off its losing streak and started to gather a little momentum,” economist Doug Porter of BMO Capital Markets said.
The move still leaves Canada on track for a fairly tepid fourth quarter for 2010, in part due to the weak handoff from September.
Most analysts now say the Bank of Canada was prescient with its prediction earlier in January that the last three months of 2010 will see a modest 2.3 per cent advance, about a full point less than in the U.S.
There were other reasons to feel some encouragement about the near-term future. The U.S. reported Monday that consumers increased spending by 0.7 per cent in December, the fastest pace in a decade and sixth straight monthly advance.
And the U.S. Federal Reserve said its survey showed a dramatic hike in demand for commercial and industrial loans, suggesting firms there were reinvesting.
Both indicators are positive for Canadian firms, who have been waiting the better part of a year for both U.S. companies and consumers to re-start their engines.
At an event near Toronto, Finance Minister Jim Flaherty said the mood at the just completed World Economic Forum in Switzerland was “cautiously positive” and called on Canadian businesses to show optimism.
He said he has detected “some hesitancy” among firms to commit to investments during pre-budged consultations the past few months.
“We really do need the private sector to step up to the plate and to be bold, invest, hire, be confident in the future of the Canadian economy, which has one of the most brilliant economic futures in the world.”
Until businesses have confidence, “we’re going to have a challenge with respect to unemployment numbers,” he said.
Canada got some bad news on the jobs front last week when Statistics Canada revised down the number of jobs created since the recovery by about 67,000, leaving the economy still shy of where it stood prior to the recession.
NDP Leader Jack Layton noted in the Commons that many of the jobs that have been created have been of lower paying and part-time.
A key test for the Canadian economy comes after March when almost all the federal stimulus spending meant to buck up activity during the downturn ends, leaving the private sector to pick up the slack.