|Canadian economy growing again but further reports this week will shed more light|
|Canada’s economy grew 5.4 per cent in the third quarter on an annualized basis, beating analyst expectations for a gain of three per cent, Statistics Canada data showed on Tuesday.|
Canada’s gross domestic product expanded by 1.3 per cent from July to September over the previous three-month stretch, when the economy contracted for the first time since the early days of COVID-19 because of tightening restrictions in many areas as the delta variant took hold.
A jump in consumer spending was the biggest reason for the overall increase, with households spending more on semi-durable goods (up 14 per cent) as well as services (up six per cent). Semi-durable good increases included clothing — up by almost 27 per cent during the quarter — and footwear, which spiked by 30 per cent. As provinces expanded access to nonessential stores and bumped up capacity limits, there were increases in spending on transportation services such as flight tickets, recreation and cultural activities, food and beverage spending and grooming services.
TD Bank economist Sri Thanabalasingam said that overall the numbers were good, but they could have been even better were it not for ongoing supply chain issues with big-ticket items.
“Hampered by global supply chain disruptions, consumers spent less on durable goods, specifically automobiles, and businesses invested less in machinery and equipment,” he said. “If not for supply shortages, GDP growth could have been even stronger in the third quarter.”
Economy watchers are expected to pay close attention Wednesday to the latest auto sales figures — a fresh indicator of the extent to which seasonally adjusted vehicle purchases are improving or worsening, as supply chain problems work their way through the economy. On Friday, jobs numbers come out, with analysts forecasting a gain of 30,000 and 40,000 jobs to tick the unemployment rate down to near 6.6 per cent.
In the U.S., Wall Street’s main indexes tumbled more than one per cent on Tuesday after Federal Reserve chair Jerome Powell said at a congressional hearing that it is a good time to retire the “transitory” description for inflation that both he and some officials in Joe Biden’s administration have been bandying about for months.
“The recent rise in COVID-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” he said. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labour market and intensify supply-chain disruptions.”
There has been much talk about the so-called “Great Resignation” — a catchall term to describe boomers seeking early retirement instead of staying on during a pandemic, with others taking stock of their lives during the pandemic and leaving jobs in hopes of a better career path. But Powell said the American labour force participation rate did not pick up much in the fall despite the return of students to school — theoretically freeing up parents to return to work — as well as the expiration of some pandemic-related aid for the unemployed.
Before Powell and Treasury Secretary Janet Yellen testified on Capitol Hill, the U.S. Conference Board reported Tuesday that its consumer confidence index dropped to a reading of 109.5, down from 111.6 in October and the lowest reading since February when the US. was at the end of a massive virus surge. The latest survey was completed on Nov. 19 so therefore did not even include the uncertainty surrounding omicron.
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