Canada's economy grew at a rate of 1.7 percent in the fourth quarter, failing to meet analysts' expectations as consumer spending waned, the government said Friday. After starting 2017 with a bang that pushed Canada ahead of other Group of Seven (G7) industrialized countries, its economy slowed in the second half of the year.
Analysts had predicted 2.1 percent GDP growth in the last three months of the year, following a 1.7 percent uptick in the third quarter. The US economy, by comparison, grew 2.5 percent in the fourth quarter.
According to Statistics Canada, residential construction increased in the quarter, as did business outlays on machinery and equipment - primarily on aircraft and other transportation equipment. Household consumption, meanwhile, slowed to 0.5 percent growth, following a 0.9 percent increase in the previous quarter.
"Don't blame Canadians for a softer tone to GDP growth in the latter half of 2017," said Avery Shenfeld, chief economist at the Canadian Imperial Bank of Commerce (CBIC), in a note to investors. He wrote that domestic demand had remained strong, but business inventory accumulation was weaker in the fourth quarter, and as in the third quarter, there was "a larger gain in imports (ie more of the demand going to foreign suppliers) than exports."
Exports rose 0.7 percent after falling in the previous quarter, but were outpaced by a 1.5 percent increase in imports. This followed the entry into force of the Canada-European Union free trade agreement in September.
Shenfeld also noted end of year declines in key sectors - retailing, wholesale and manufacturing - during the usually peak Christmas shopping period. For all of 2017, growth accelerated to 3.0 percent, following 1.4 percent growth in 2016.
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