Canada’s economy unexpectedly accelerated in the second quarter to a Group of Seven-beating 4.5 per cent annualized pace amid the biggest binge in household spending since the last recession.
Economists had anticipated a 3.7 per cent pace, matching the first quarter rate that was left unchanged Thursday by Statistics Canada. The better-than-expected result was due to stronger consumption growth than economists had predicted.
The Big Picture
The surge in growth should help cement the chances the Bank of Canada will continue raising interest rates in coming months as the nation’s economy nears full capacity. The central bank forecast in July spare capacity would be eliminated by the end of this year, and that was with second quarter growth forecasts of 3 per cent.
Canada’s economy also grew at a more-than-expected 0.3 per cent pace in June, on the back of higher construction.
Here are the Highlights
Canada’s consumers, benefiting from a buoyant jobs market and rising home values, are on a tear. Household consumption rose at an annualized 4.6 per cent pace in the second quarter, following a 4.8 per cent gain in the second quarter. That’s the best two-quarter gain since before the 2008 recession.
It’s a tale of two industries for Canada’s housing market. Residential construction was little changed with repair and renovation work posting stronger gains but overall residential investment figures were hurt by slumping activity in the resale market. Total investment in residential structures fell at an annualized 4.7 per cent pace due to a sharp decline in the so-called ownership transfer costs associated with real estate transactions(down an annualized 24.1 per cent)