MNI: Canada 4Q GDP +1.7%, Weaker Than Expected; +3.0% In 2017>

By Courtney Tower

     OTTAWA (MNI) - Canadian fourth quarter annualized GDP growth of 

1.7% marked an increase from revised 1.5% growth in the third quarter 

last year but was below market expectations of 2.0% growth for the 

quarter, data released Friday by Statistics Canada showed. 

     The agency also reported that GDP rose 0.1% in December after a 

0.4% gain in November, matching analysts' expectations. 

     GDP by industry data showed services edged up 0.1% in December 

while goods-producing sectors were down 0.1%, owing largely to a 0.7% 

drop in manufacturing. GDP excluding manufacturing rose 0.2%. 

     --BELOW BOC EXPECTATION 

     The 1.7% and 1.5% growth rates in the fourth and third quarters 

fell sharply below the 4.4% and 4.0% growths in the second and first 

quarters of the year. 

     Similarly, the quarterly increase of 0.4% in the fourth quarter, 

the same in the third, followed 1.1% and 1.0% growths in the second and 

first quarters of the year. 

     The annualized growth fell below the Bank of Canada's expectation 

of +2.5% for the fourth quarter. 

     Real GDP rose 3.0% for all of 2017, the highest rate since 3.1% in 

2011. "Much of this growth was attributable to the first two quarters of 

2017, with deceleration observed toward the end of the year," Statistics 

Canada said. 

     On a quarterly basis, there were positive indicators for the 

comfort of the Bank of Canada, with business investment increasing 2.3% 

from the third quarter as manufacturers, retailers and wholesalers added 

to their inventories. 

     --EXPORTS, INVESTMENT, RISE 

     Export volumes were up 0.7% on the quarter following a 2.7% decline 

in the third quarter. Real imports were up 1.5%, following a 0.1% 

increase in the third quarter. 

     "Improved terms of trade boosted economy-wide purchasing power, and 

real gross national income increased 1.0%," Statistics Canada said   

     Business gross fixed capital formation grew 2.3% in the fourth 

quarter compared with +0.8% in the third. Higher investment in housing 

was the main contributor, rising by 3.2% following a flat third quarter. 

New housing construction rose 3.0%. Spending on non-residential 

structures rose 1.3% 

     Business investment in machinery and equipment rose 3.0% in the 

third quarter. This was primarily for aircraft and other transportation 

equipment. 

     On an annual basis, exports rose +1.0% for the second straight 

year, on a 0.6% gain for goods and +2.8% for services. 

     Employee compensation rose 3.9% in nominal terms, contributing to a 

4.8% gain in household disposable income. The household saving rate 

edged up to 3.6%. 

 --MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

     [TOPICS: MACDS$,M$C$$$]