Canadian economy runs out of steam in October
8:51 AM, E.T. | December 23, 2011Economy
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 percent, well below the 3.5 percent recorded in the third quarter.
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.
Statscan said output of goods-producing industries fell by 0.2 percent in October from September, cancelling out a 0.2 percent increase in the services sector.
The utilities sector dropped by 1.5 percent on lower demand for both electricity and natural gas, while mining and oil and gas extraction were off 0.2 percent. These declines offset a 0.3 percent gain in manufacturing.
Retail trade grew by 0.6 percent, reflecting widespread gains, while the finance and insurance sector rose 0.3 percent on increased mutual fund activity.
GDP was up 2.7 percent from October 2010.