The Canadian economy shrank in the third quarter amid weak business and consumer spending as well as lower exports.
Statistics Canada released its gross domestic product report on Nov. 30, which shows the economy contracted 1.1 percent on an annualized basis.
The federal agency says a decrease in international exports and slower inventory accumulation by businesses were partially offset by increases in government spending and housing investment.
It also revised up its reading for real gross domestic product in the second quarter, noting the economy did not shrink, but rather grew by 1.4 percent on an annualized basis.
The federal agency says new housing construction in the third quarter increased for the first time since early 2022, led by apartment construction.
Bank of Canada interest rate hikes have been putting pressure on consumer and business spending as they both face higher borrowing costs.
The Nov. 30 report shows consumer spending continues to be flat for a second consecutive quarter.
Households are instead saving more as disposable income surpassed the rise in nominal spending.
The report says government transfers, namely the doubling of the GST rebate in the summer, propped up incomes as the labour market weakened.
Meanwhile, business capital investment fell by two percent in the third quarter.
Statistics Canada’s preliminary estimate for real GDP suggests the economy grew by 0.2 percent in October, following a 0.1 percent increase in September.
The central bank is set to announce its next interest rate decision on Dec. 6, after choosing to hold its key rate steady at five percent at its last two announcements.
Economists widely expect the Bank of Canada to remain on hold as inflation slows and the economy weakens.
