Signs of slowdown in Canada’s economy
2022.12.23 12:05
Signs of slowdown in Canada’s economy
Budrigannews.com – According to data released on Friday, the Canadian economy expanded by 0.1 percent in October and is anticipated to expand at the same rate in November. This indicates that the full impact of this year’s seven interest rate hikes has not yet been felt.
According to Statistics Canada, growth in October slowed down in comparison to the 0.2% increase in September, which was an upward revision from the previously reported 0.1% increase. The increase in October was in line with the median forecast of analysts.
In a note, senior economist Andrew Grantham of CIBC Capital Markets said, “The upward revision to September and modest growth in October leaves Q4 GDP tracking above the Bank of Canada’s… forecast.”
According to Robert Kavcic, Senior Economist at BMO Capital Markets, in a note, growth is “holding up perhaps a bit better than expected for Q4.” The most recent figures indicate this.
According to Kavcic, “the real question will be how things shake out during the first half of next year, when aggressive rate hikes start to more fully work their way through the system.”
To combat inflation that is well above its target of 2%, the Bank of Canada has increased rates at a record rate of 400 basis points in nine months to 4.25 percent, a level not seen since January 2008.
According to data from earlier this week, Canada’s annual inflation rate decreased to 6.8% in November, but it was slightly higher than anticipated due to widespread price pressures. This leaves the door open for a second rate increase in January.
The bank has stated that the policy rate will be more dependent on data. On January 25, a 25 basis point increase is more than 50% likely in the money markets.
According to Statscan, the services providers experienced a gain of 0.3 percent in October, with gains led by the public sector, wholesale, and client-facing industries.
After four consecutive months of growth, the goods-producing industries experienced a 0.7% decrease in October, primarily as a result of a decrease in mining, quarrying, and oil and gas extraction and a weakening in the manufacturing sector.
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Statscan stated that gains in wholesale trade and utilities contributed to the preliminary estimate for November’s 0.1% monthly GDP increase.
Stephen Brown, senior Canada economist at Capital Economics, wrote in a note, “While there are upside risks to our forecast that GDP will be unchanged this quarter, we continue to expect GDP to contract in early 2023.”
At 1.3645 to the US dollar, or 73.29 cents, the Canadian dollar was practically unchanged.
