* Economy grows for fourth month in a row
* Goods-producing and services industries both advance
* Canadian dollar boosted by healthy figures
By David Ljunggren
OTTAWA, Dec 23 The Canadian economy showed
unexpected strength in October, growing for the fourth month in
a row and boosting market hopes that the country might finally
be shaking off the worst of the great recession.
Statistics Canada said on Monday the economy had grown by
0.3 percent from September. Analysts had forecast a 0.2 percent
advance after September's 0.3 percent increase.
Although Canada regained most of the jobs it lost since 2008
and 2009, growth has been largely sluggish, prompting the Bank
of Canada to make clear it will not raise its key interest rate
until it sees signs of a firm recovery.
The economy has posted growth every month this year apart
The output of goods-producing industries grew by 0.4 percent
in October on higher manufacturing while service industries
output climbed by 0.3 percent as almost all major industrial
sectors registered growth.
"Canada's economy is showing sustained strength for the
first time since the early days of the recovery," said BMO
Capital Markets economist Sal Guatieri.
The Bank of Canada has said annualized GDP growth in the
fourth quarter will be 2.3 percent, down from 2.7 percent in the
third. Guatieri, though, said October's data suggested fourth
quarter growth could be around 2.6 percent.
"Importantly, this would mark the first quarter since early
2011 that GDP has posted successive increases above two percent
- that is, above potential," he said in a note to clients.
Manufacturing output grew by 1.3 percent in October while
wholesale trade and retail trade advanced by 1.4 percent and 0.3
percent respectively. Construction, as well as mining, quarrying
and oil and gas extraction, were unchanged.
The economy grew by 2.7 percent from October 2012, up from
September's 2.4 percent year-on-year advance.
Peter Buchanan of CIBC World Markets said the 0.3 percent
increases in both October and September "suggest a fairly decent
start for the economy to the fourth quarter."
The data helped push the Canadian dollar higher and
by 9.40 am (1440 GMT) it was at C$1.0601 to the U.S. dollar, or
94.33 U.S. cents, up from Friday's close of C$1.0648 to the
greenback, or 93.91 U.S. cents.
The Bank of Canada is worried about the risks posed by the
persistently low inflation, which in November was just 0.9
percent, well below the central bank's target of 2 percent.
The Bank has kept its key overnight interest rate unchanged
at 1 percent since September 2010, citing in part the inflation
rate and the underperforming economy.
A Reuters poll of primary dealers late last month showed
that most did not expect the bank to raise rates until the
second quarter of 2015.