Real gross domestic product (GDP) advanced at a slower but still healthy 0.8% in the third quarter, Statistics Canada reported this morning.
Exports picked up in strength to give GDP a boost as did new housing activity. Consumer spending remained flat and business capital spending slowed. In comparison, the US GDP grew 1.0% in the third quarter.
There is reason for concern, however, as the economy lost some steam near the end of the quarter with GDP edging up a modest 0.1% in September. It should be noted that despite the stunted growth of the economy in September, the month’s increase did mark the twelfth consecutive monthly advance since the setback triggered by the events of September 11, 2001.
Exports of Canadian goods grew briskly in the third quarter of 2002, on the strength of record sales of autos and motor vehicle parts. In fact, exports posted the strongest gain (+2.3%) in ten quarters. Exports were particularly stimulated by US demand for automotive products, reflecting the strength of consumer spending on motor vehicles and parts in US GDP. In the later part of the quarter, exports of new trucks also increased in anticipation of a new diesel motor emission standard in the United States on October 1. Machinery and equipment exports, including engines and turbines, recovered (+2.1%), and lumber exports rebounded 5.6% from the second quarter, when anti-dumping and countervailing duties were imposed by the United States.
This strength in exports pushed the surplus on trade in goods to its highest level in over a year and was a key driver behind the gain in the overall current account surplus in the third quarter.
Corporate profit growth slowed to 3.0%, but profits reached their highest level since the peak in the first quarter of 2001.