OTTAWA: Canada's economy picked up speed in the third quarter, with stronger-than-expected growth driven mainly by consumer spending and business inventory accumulation while there were also signs of a rebound in business investment.
Real gross domestic product grew 2.7 percent, annualized, in the July-September period, the fastest clip in two years, according to Statistics Canada data on Friday.
The performance beat the median forecast of 2.5 percent growth in a Reuters poll, and could raise hopes the economy is pulling out of a sluggish period to grow more quickly and lift chronically weak inflation, flagged by the Bank of Canada as the reason interest rates are on hold for the foreseeable future.
The report followed a disappointing 1.6 percent GDP gain in the second quarter, according to Statscan's revised figures. Household spending slowed in the quarter to a 2.2 percent annualized rate from 3.6 percent in the second quarter, but was still the biggest contributor to growth as it has been throughout the recovery.
Businesses nearly doubled their stockpiles compared with the second quarter, with non-farm inventories jumping by C$5.2 billion ($4.9 billion) and farm inventories posting their biggest quarterly gain since 1981 to reach C$4.1 billion after a huge crop of canola and wheat.
Business investment, which the Bank of Canada hopes will become a key driver of growth, increased 2.4 percent, annualized, in the quarter after climbing just 0.5 percent in the previous quarter.
But exports - the other potential economic engine -- have disappointed and subtracted from GDP.
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