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UPDATE 1-Canada's economic growth weakens sharply in third quarter
November 30, 2012 / 1:35 PM / 5 years ago

UPDATE 1-Canada's economic growth weakens sharply in third quarter

* Economy grows 0.6 pct, annualized, in third quarter vs 1.7 pct in second

* September GDP flat for second month in a row

* Exports, business investment, housing drag down growth

OTTAWA, Nov 30 (Reuters) - Canada’s economy grew at a weaker-than-expected 0.6 percent annual rate in the third quarter as exports fell at the fastest pace in more than three years, business investment sputtered and the housing market cooled.

The disappointing number released by Statistics Canada on Friday contrasts with the 2.7 percent third-quarter growth in the United States and was below the 0.9 percent forecast for Canada in a Reuters poll.

After two straight quarters of 1.7 percent expansion, the slowdown in the third quarter reflects fragile business sentiment over the European debt crisis as well as tepid global demand for Canada’s oil and other energy products. Consumer spending continued to be the key driver of growth although Canadians bought fewer houses.

In September, gross domestic product stalled for the second month in a row.

Exports, hard hit by the weak U.S. economy and a strong currency, fell 2 percent in the third quarter compared with the second, the biggest drop since the second quarter of 2009, Statscan said.

Business investment in machinery and equipment and non-residential construction slid 0.6 percent quarter-on-quarter, the first decline since mid-2009 and weakening from a 1.3 percent burst in the second quarter.

In another sign the country’s hot housing market is cooling, investment in residences fell 0.9 percent due to slower resale activity. Housing construction grew 1.6 percent, about half the average growth over the previous five quarters.

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