Experts had long predicted a bounce back from a second-quarter slump, which was largely due to oil-production shutdowns linked to May’s Alberta wildfires and scheduled maintenance at oilsands facilities.                                 THE CANADIAN PRESS/Jonathan Hayward

Experts had long predicted a bounce back from a second-quarter slump, which was largely due to oil-production shutdowns linked to May’s Alberta wildfires and scheduled maintenance at oilsands facilities. THE CANADIAN PRESS/Jonathan Hayward

Energy exports help economy bounce back

The Canadian economy slightly exceeded expectations in the third quarter.

OTTAWA — The Canadian economy slightly exceeded expectations in the third quarter to grow at its fastest pace in more than two years and rebound from a second-quarter contraction.

The country’s real gross domestic product expanded at an annual rate of 3.5 per cent with help from a strong performance in energy exports, Statistics Canada said Wednesday.

Experts had long predicted a bounce back from a second-quarter slump, which was largely due to oil-production shutdowns linked to May’s Alberta wildfires and scheduled maintenance at oilsands facilities. In that quarter, real GDP recoiled at an annual rate of 1.3 per cent — revised from an initial reading of a 1.6 per cent pull back.

But the latest quarterly number came in above predictions and many analysts were encouraged by the particularly sturdy growth of 0.3 per cent in September, the final month of the third quarter.

“Certainly the hand-off looks much firmer than we thought it would,” Desjardins senior economist Jimmy Jean said in an interview.

“I think there’s good reason to remain somewhat optimistic.”

Canada saw growth of 0.2 per cent in August and 0.5 per cent in July.

Before Wednesday, Jean said Desjardins had projected 1.9 per cent growth for the fourth quarter. He now expects that number will very likely move north of two per cent.

Economists had been predicting the economy to grow 0.1 per cent in September and at an annualized rate of 3.4 per cent in the third quarter, according to Thomson Reuters. In October, the Bank of Canada predicted 3.2 per cent growth for the same period.

Overall, exports of goods and services rose 2.2 per cent in the third quarter compared to a contraction of 3.9 per cent in the second quarter.

Statistics Canada said exports of energy products expanded 6.1 per cent in the third quarter following a decline of 5.1 per cent during the previous period.

Jean pointed to further growth in household spending and the 3.7 per cent increase for investment in non-residential structures — its first increase after seven consecutive quarterly declines.

On top of this, Jean added that moving forward he expected Canada to feed off the strong U.S. economy.

BMO chief economist Doug Porter was also optimistic about the future, thanks to the sturdy performance in September and the second-quarter revision.

“For the first time in ages, this sets the stage for broad-based upward revisions to Canada’s overall GDP growth rate, for both 2016 and perhaps 2017,” Porter wrote in a research note to clients.

“The latter could also be potentially fuelled by firming oil prices.”

Real GDP growth in the third quarter posted its strongest performance since the second quarter of 2014, when it reached was 4.2 per cent.

TD economist Brian DePratto, however, was far more skeptical about Wednesday’s report.

“On the face of it, it’s a pretty positive report,” DePratto said in an interview.

“Unfortunately, when you kind of open the hood on it, there’s a little bit less to be happy about than what we might have expected.”

He noted, for example, that once energy is stripped away growth in September would have only been around 0.1 per cent.

DePratto added that the economy has yet to see a real rotation to other sources of growth, that the Bank of Canada has long been hoping for. Household spending remained a key economic driver and a continued slide in business investment was a disappointment because analysts had been expecting to a bit of a “bottoming out,” he said.

Statistics Canada found that business investment in machinery and equipment contracted 3.2 per cent in the third quarter, following a gain of one per cent in the second quarter.

The report said business investment in residential structures decreased 1.4 per cent in the third quarter after nine straight quarters of growth. The agency said the decline was due to a 5.7 per cent drop in ownership transfer costs, which reflect movement in the resale market.

The lower transfer costs followed British Columbia’s introduction of a new tax on home purchases by non-residents, the report noted.

The GDP reading came ahead of the Bank of Canada’s scheduled announcement next week on its trend-setting interest rate, which is widely expected to stay at 0.5 per cent.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Lyn Radford, 2019 Canada Winter Games board chair, was named 2020 Sport Event Volunteer of the Year at the Prestige Awards. (File photo by Advocate staff)
WATCH: Lyn Radford wins award for volunteer efforts

The board chair of the 2019 Canada Winter Games in Red Deer… Continue reading

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
Red Deer dips below 300 active COVID-19 cases

The number of active COVID-19 cases in Red Deer continued to drop… Continue reading

A candlelight vigil will be held in Red Deer on Thursday to honour the 350-plus people killed in the Easter bombing attack in Sri Lanka. Contributed photo
Candlelight vigil planned for deaths linked to Olymel COVID-19 outbreak

A candlelight vigil is being planned for those who died due to… Continue reading

Red Deer Rebels forward Jaxsen Wiebe battles Calgary Hitmen forward Cael Zimmerman for a loose puck when the two teams squared off in February last season. (Photo by BYRON HACKETT/Advocate Staff)
Calgary Hitmen shutout Red Deer Rebels

Rebels name centre Jayden Grubbe team captain ahead of Friday’s game

Bryson, six, and Mara, eight, play with puppies from Dogs With Wings Saturday. (Photo by Sean McIntosh/Advocate staff)
WATCH: Dogs With Wings introduces Red Deer program

A program that trains puppies to be certified service, autism, facility and… Continue reading

Walter Gretzky father of hockey hall-of-famer Wayne Gretzky waves to fans as the Buffalo Sabres play against the Toronto Maple Leafs during third period NHL hockey action in Toronto on Tuesday, January 17, 2017. THE CANADIAN PRESS/Nathan Denette
Funeral for Walter Gretzky to be held Saturday in home town of Brantford, Ont.

The funeral for hockey legend Wayne Gretzky’s father Walter will take place… Continue reading

A sign for the Canadian Security Intelligence Service building is shown in Ottawa on May 14, 2013. A newly released audit report shows that difficulties with the judicial warrant process at Canada's spy agency — an issue that made headlines last summer — stretch back at least nine years. THE CANADIAN PRESS/Sean Kilpatrick
Spy warrant shortcomings stretch back almost a decade, newly released audit shows

OTTAWA — A newly released audit report shows that difficulties with the… Continue reading

In this file photo, a lotto Max ticket is shown in Toronto on Monday Feb. 26, 2018. (By THE CANADIAN PRESS)
No winning ticket for Friday night’s Lotto Max jackpot

TORONTO — No winning ticket was sold for the estimated $29 million… Continue reading

A trial countdown sign marks the days at George Floyd Square, March 4, 2021, in Minneapolis. Ten months after police officers brushed off George Floyd's moans for help on the street outside a south Minneapolis grocery, the square remains a makeshift memorial for Floyd who died at the hand of police making an arrest. The trial of former Minneapolis police officer Derek Chauvin will begin with jury selection on March 8. (AP Photo/Jim Mone)
Officer’s trial could reopen intersection where Floyd died

MINNEAPOLIS — During a group’s recent meeting at the now-vacant Speedway gas… Continue reading

FILE - In this Aug. 30, 2020 file photo Portland Police Chief Chuck Lovell calls for an end to violence in the city during a news conference a day after a demonstrator was shot and killed in downtown Portland. Amid protests following the police killing of George Floyd last year Portland dissolved a special police unit designed to focus on gun violence. Critics say the squad unfairly targeted Black people, but gun violence and homicides have since spiked in Oregon's largest city, and some say disbanding the 35-officer unit was a mistake. (Sean Meagher/The Oregonian via AP, File)
As violence surges, some question Portland axing police unit

PORTLAND, Ore. — Elmer Yarborough got a terrifying call from his sister:… Continue reading

Harley Hay
Harley Hay: Just don’t call it cod liver oil

Many people swear that a daily dose of various vitamins is an… Continue reading

Email editor@auburn-reporter.com
Letter: Preserving green spaces in Red Deer

The Advocate published an article Feb. 11 about Sunnybrook residents concerned about… Continue reading

Former Toronto Argonauts lineman Chris Schultz remembered as a gentle giant

Former Toronto Argonauts lineman Chris Schultz remembered as a gentle giant

Most Read