(Adds analyst comments on consumer spending, housing)
By Leah Schnurr
OTTAWA Nov 30 Canada's economy accelerated in
the third quarter at its fastest pace in more than two years as
it benefited from a rebound in oil exports, cementing
expectations that the central bank will keep interest rates
steady next week.
Gross domestic product grew at an annualized 3.5 percent,
Statistics Canada said on Wednesday, topping economists'
expectations of 3.4 percent and picking up from a contraction in
the second quarter.
Last quarter brought the strongest pace of expansion since
the second quarter of 2014 and exceeded the Bank of Canada's
forecast for 3.2 percent growth. The economy has struggled to
regain sustained momentum since it fell into a brief recession
last year due as oil prices dropped.
Economists were encouraged by September's
stronger-than-expected 0.3 percent growth, which suggested the
fourth quarter could slow less than anticipated and potentially
give the bank room to hold steady.
"It certainly reduces the probability for them to have to
introduce a further ease," said Paul Ferley, assistant chief
economist at Royal Bank of Canada. "There appears to be
sufficient momentum in the economy."
The Canadian dollar was boosted by the data and a jump in
Policymakers meet next week. The bank cut rates twice in
2015 to combat the oil shock and acknowledged in October it had
considered cutting again.
Third-quarter growth in exports bolstered the economy as
energy products recovered from second-quarter weakness that
resulted from wildfires in northern Alberta.
Exports of services and consumer goods gained, while
increases in household consumption and inventories boosted
The long support that housing has provided faltered as
business investment in residential structures contracted. A
decline in ownership transfer costs weighed after a Vancouver
tax on home purchases by overseas buyers took effect in August.
The central bank has looked for a rotation away from housing
and toward exports. While the data was encouraging, much depends
on a stronger U.S. economy, said Sherry Cooper, chief economist
at Dominion Lending Centers.
The household savings rate jumped along with disposable
income. With wages growing at the same pace as in the second
quarter, it suggested families were holding on to at least some
of the new child-benefit checks the government began mailing out
The rise in income points to room for more spending ahead,
said Nick Exarhos, economist at CIBC.
Separate data showed producer prices rose in October on
higher costs for energy and petroleum products.
(Additional reporting by Allison Martel and Fergal Smith in
Toronto; Editing by Jeffrey Benkoe and Will Dunham)