The Canadian economy shrank on per-person basis for a sixth consecutive quarter as higher interest rates continued to weigh on business investment.
Statistics Canada’s gross domestic product report says the economy grew at an annualized rate of one per cent in the third quarter, down from 2.2 per cent in the second quarter.
The figure is in line with economists’ expectations, but lower than the Bank of Canada’s October forecast of 1.5 per cent.
Real GDP per capita fell 0.4 per cent in the quarter.
Higher household and government spending was partly offset by slower inventory accumulation, lower business capital investment and lower exports.
Meanwhile, economic growth remained weak in the month of September, with real GDP growing 0.1 per cent. A preliminary estimate suggests the same pace of tepid growth in October as well.
Despite the slower growth, however, household net savings in the third quarter increased as disposable income grew at double the rate of spending.
The report says high wages and lower interest rates helped the household savings rate hit a three-year peak in the third quarter, reaching 7.1 per cent.
By comparison, it was below three per cent at the end of 2019.
The latest economic data comes ahead of the Bank of Canada’s interest rate decision on Dec. 11.
Economists are widely expecting the central bank to once again lower its policy rate, which currently sits at 3.75 per cent.
Governor Tiff Macklem announced a half-percentage point rate cut in October in response to inflation returning to target, but said the size of the next cut would be determined by incoming economic data.
Canada’s annual inflation rate bounced back up to two per cent in October after falling to 1.6 per cent the previous month.
The Bank of Canada will also consider the November job report ahead of its rate decision.
This report by The Canadian Press was first published Nov. 29, 2024.