Canada’s growth rate fell by half in the third quarter from its pace in the first six months of the year, ahead of what’s expected to be an even sharper downturn later this year.

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Canada GDP numbers out today show economy gearing down Back to video

Preliminary industry-based data show gross domestic product expanded 0.1 per cent in September, Statistics Canada reported Friday in Ottawa. That followed an unexpected gain of 0.1 per cent in August, versus a flat reading expected by economists for that month.

Overall, the pace of monthly gains was enough to produce annualized growth in the third quarter of 1.6 per cent, according to a preliminary estimate from the Statistics Canada, versus a 3.3 per cent pace in the second quarter and 3.1 per cent during the three first months of the year.

The quarterly numbers are Statistics Canada’s first preliminary estimate of third quarter GDP, and will almost certainly be revised.

The numbers show inflation and higher interest rates hadn’t completely derailed economic activity over the summer, with retail sales showing a rebound in August, but the economy is clearly gearing down.

Economists are anticipating even slower growth in the fourth quarter, a key reason why the Bank of Canada on Wednesday slowed its pace of interest-rate hikes, warning of a coming slowdown.

On Wednesday, the central bank forecast growth will slow to 0 per cent to 0.5 per cent later this year and in the first half of 2023, with chances of a technical recession. It had predicted third quarter-growth would come in at an annualized 1.5 per cent.

Based on Bloomberg surveys, economists have been forecasting third-quarter growth of 1 per cent annualized.

There are effectively three separate gauges of quarterly GDP: income, expenditure and output by industry — the latter coming on Friday. The most widely watched measure is the expenditure-based number that will be released Nov. 29.

Governor Tiff Macklem has already increased the Bank of Canada’s policy rate by 3.5 percentage points since March, one of the most forceful tightening cycles in the central bank’s history. On Wednesday, he signalled that the policymakers “are getting closer” to the end of this tightening phase.

Bloomberg.com