Canadian economy beats expectations with 4.5% GDP growth in Q2

Posted September 01, 2017

Trump is talking about the GDP number for the second quarter of 2017, which the Commerce Department on Wednesday announced it was revising upwards from its initial 2.6 percent to 3 percent.

"The general situation of the economic growth remain unchanged, with an increase in consumer spending and investments in non-residential real estate more important than in the previous quarter", said the ministry, stressing that " these increases were partially offset by a slight decline in public spending ".

The second-quarter result likely cements the likelihood of at least one more rate increase from the Bank of Canada in 2017. This gives the US its strongest quarter since 2015.

"Even as we see daylight in today's economy, we find ourselves in the shadow of daunting longer-term challenges to economic growth and shared prosperity", said John Williams, president of the Federal Reserve Bank of San Francisco, in an August 2 speech.

Canada's economy accelerated far more than expected in the second quarter, racking up the strongest pace of growth in almost six years, as consumers continued to spend and energy exports rose, data from Statistics Canada showed on Thursday. In addition, the u.s. president still has not managed to enact a law in the economic field, due to political deadlock in Congress.

The second quarter was also substantially above the Bank of Canada's forecast and extended a recent strong run for the economy that prompted the central bank to raise rates in July for the first time in seven years.

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The report also noted that profits in the second quarter went up 8.1% from this time past year.

During last year's presidential campaign, Trump repeatedly attacked the Obama administration's economic record.

Gross domestic product grew at an annualized 4.5 percent, Statistics Canada said on Thursday, handily topping forecasts for 3.7 percent and making for the best pace of growth since the third quarter of 2011. Thus, if consumer and business spending hold up for the balance of the year and firms build their inventories at a relatively normal pace, real GDP growth in the second half of the year could accelerate to 3 percent or better.

Canada's performance in the first six months of the year was the strongest since 2002 on a non-annualized basis and has made the country a growth leader among its industrialized peers two years after it was hit by lower oil prices.

While the devastation from Hurricane Harvey is likely to hurt the economy along the Texas Gulf Coast, economists don't expect the impact on the a whole to be drastic. "The 3 percent growth the president talked about is not in sight".

The GDP report was enough for CIBC chief economist Avery Shenfeld to change his mind. Fourteen out of 20 major industries expanded during the month, DePratto noted, with the goods-producing side of the economy leading the way.