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Third-quarter GDP growth conceals worrying trends: Myers

Published by CME Webmaster on November 30, 2011

The Canadian economy grew at an annualized rate of 3.5 per cent in the third quarter, driven largely by a 14 per cent spike in exports, according to numbers released today by Statistics Canada.

The increase topped initial expectations, including those of Bank of Canada Governor Mark Carney, who predicted two per cent growth this past October.

But Jayson Myers, president and CEO of Canadian Manufacturers & Exporters, says the data conceals two worrying trends:

  • An 11 percent annualized decline in business investment in machinery and equipment (i.e. technology), as companies hold back investment in the face of economic uncertainty and concerns over a tightening credit market.
  • Consumer spending has slowed (1.2 per cent annualized increase) and spending on durable goods, such as automobiles, furniture and appliances is down.

"Expect economic growth in the final quarter of 2011 and first quarter of 2012 to weaken significantly in light of continued financial turmoil," says Myers. "Export growth will slow as well, while consumer demand, government spending and business investment will likely remain weak."

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