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GDP Growth Slows, Though Employment Remains Strong

Dec 01, 2017
Pedro Antunes Pedro Antunes
Deputy Chief Economist and Executive Director
Forecasting and Analysis

The Conference Board of Canada’s Deputy Chief Economist Pedro Antunes offers the following perspectives/insights:

Quote

“Today’s data releases confirm our expectations of a strong, but slowing Canadian economy. After a hot start to the year, GDP growth was expected to slow, so this morning’s report was not a surprise. Further, after years of weak investment, it seems firms are finally confident enough to pull the trigger on spending. While consumption is expected to weaken as consumers battle higher debt loads, the strong labour market is supportive of continued, albeit softer, spending growth. With unemployment reaching its lowest rate since 2008 and wage growth accelerating, we continue to expect a gradual tightening in monetary policy from the Bank of Canada.”
—Pedro Antunes, Deputy Chief Economist, The Conference Board of Canada.

Insights

  • Canada’s GDP slowed in the third quarter, growing at an annualized rate of 1.7 per cent.
  • After declining sharply in 2015 and 2016, business investment rose for the third consecutive quarter. Stronger investment is good news for the economy, as Canadian businesses are beginning to face capacity constraints.
  • Consumption continues to be a major source of growth, despite high consumer debt loads. While total consumer spending remained strong, growth in the consumption of goods slowed in the third quarter.
  • Exports were the main source of weakness in the quarter, declining by 2.7 per cent as exports to the U.S. weakened.
  • Employment rose by 80,000 jobs in November, 29,000 jobs of which were full-time. The strength of the labour market continues to surprise. Since last November, employment is up 390,000 jobs.
  • November saw a steep 0.4 percentage points drop in the unemployment rate to 5.9 per cent, the lowest since 2008. This has continued the steady decline in the unemployment rate which began the year at 6.8 per cent.
  • Strong job gains were not the only piece of good news from the labour market, as average hourly wages are up 2.8 per cent compared to November of last year.