MNI: Canada GDP Grew At 1.6% Annualized Pace In Third Quarter

Canada's economy grew at a 1.6% annualized pace in the third quarter according to a flash estimate from the federal statistics office Friday, in line with the estimate of 1.5% from a central bank that says a recession by mid-2023 is a coin toss.

Statistics Canada's preliminary Q3 estimate comes alongside its flash reading that GDP grew 0.1% in September. There were gains in oil and gas extraction, manufacturing and the public sector and a decline in construction.

The Ottawa-based agency's official August estimate showed the economy grew 0.1%, beating the economist consensus that output would be unchanged. Agriculture, retail sales and the government sector led growth in August, when 14 of 20 major industries reported expansion. Services GDP climbed 0.3% while goods production fell 0.3%.

The Q3 flash estimate is a slowdown from Q2 growth of 3.3%. Former BOC Governor Mark Carney,  the IMF and several major commercial banks say the economy is heading for recession as higher interest rates squeeze consumers and businesses struggle in a wobbly global economy.

There was some evidence of the drag of higher interest rates in the August GDP report. Construction fell for a fifth straight month with a 0.7% decline. Manufacturing declined for the fourth time in five months. Still, agriculture was boosted by rising crop yields and retail spending rebounded in August.

The Bank of Canada has said higher interest rates are needed to slow an overheated economy so supply and demand come back into balance. Investors predict the 3.75% rate will rise at least another quarter point in December, following a less-than-expected 50bp move Wednesday.