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“The Canadian economy returned to growth towards the end of 2023, and a little more emphatically than expected,” CIBC economist Andrew Grantham wrote in a note after the data was released on January 31.
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Statistics Canada said most of this growth came from goods-producing industries, including manufacturing and wholesale trade, which recorded their biggest increases since January 2023.
Bank of Montreal Chief economist Douglas Porter said that since these sectors are heavily influenced by exports, « it appears that the surprising resilience of the U.S. economy is indeed spilling over into some sectors in Canada. »
Wholesale trade rebounded 0.7 percent after two months of decline.
A preliminary estimate suggests that GDP increased by 0.3 percent in the fourth quarter after showing a decline in the third quarter. This would bring economic growth to 1.5 percent in 2023, StatCan said.
“Canada saw a much stronger growth backdrop than expected at the end of 2023, suggesting an upward revision to estimates for 2024,” BMO’s Porter wrote.
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If the December estimate is anywhere near accurate, there will be much more momentum than expected in 2024, he said. It could also mean less pressure on the Bank of Canada to start cutting interest rate anytime soon.
“This strong result, after a long drought for growth, offers policymakers an opportunity to gently push back on the chatter, while waiting for core inflation to fall further,” Porter said.
• E-mail: dpaglinawan@postmedia.com
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