Canadian economy runs out of steam in October

Canada’s economy stalled in October after four consecutive months of growth, pointing to a fourth quarter slowdown as increasing global uncertainty mutes expectations for next year.

Statistics Canada said on Friday that October gross domestic product was unchanged from September, matching the forecast of market operators who cited the impact of turmoil in Europe and a troubled U.S. economy as factors slowing Canada’s economy.

“The Canadian economy has already exhibited signs of domestic demand fatigue - household balance sheets are stretched and will likely keep consumer spending subdued,” said TD Securities strategist Mazen Issa.

Analysts said annualized fourth quarter growth was unlikely to breach 2.0 per cent, well below the 3.5 per cent recorded in the third quarter.

Mr. Issa said subdued U.S. growth and sluggish Canadian exports meant “the first half of 2012 is expected to be tumultuous” and predicted the Bank of Canada would keep interest rates low the entire year.

Canada’s currency slipped to $1.0190 against the greenback, or 98.14 cents (U.S.), down from about $1.0183, or 98.20 cents, immediately before the figures were released.

Statscan said output of goods-producing industries fell by 0.2 per cent in October from September, cancelling out a 0.2 per cent increase in the services sector.

The utilities sector dropped by 1.5 per cent on lower demand for both electricity and natural gas, while mining and oil and gas extraction were off 0.2 per cent. These declines offset a 0.3-per-cent gain in manufacturing.

Retail trade grew by 0.6 per cent, reflecting widespread gains, while the finance and insurance sector rose 0.3 per cent on increased mutual fund activity.

Original Article
Source: Globe