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INSTANT VIEW-Canada's economy posts stronger-than-expected growth in third quarter

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TORONTO, Nov 29 (Reuters) - Canada’s economy grew at an annualized rate of 2.9% in the third quarter, above analysts’ expectations, driven by exports and non-residential structures, Statistics Canada data showed on Tuesday.

September’s real GDP rose by 0.1% over August, meeting expectations, while October’s GDP was likely unchanged, StatsCan said in a flash estimate.

STORIES:

Market reaction: CAD/

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COMMENTARY

ROYCE MENDES, DIRECTOR & HEAD OF MACRO STRATEGY AT DESJARDINS

“The headline beat on Q3 GDP looks like a bit of a head fake. The underlying details don’t paint a very strong picture. Moreover, the monthly data suggest that the economy began the fourth quarter on weak footing. As a result, we continue to see the Bank of Canada hiking rates only 25bps next week.”

JAY ZHAO-MURRAY, MARKET ANALYST AT MONEX CANADA

“Today’s GDP data doesn’t close the debate on next week’s Bank of Canada decision. While growth beat estimates in the third quarter, we also got a fairly weak reading in domestic demand, alongside a cutback in household spending.”

“With the economy expanding by a meager 0.1% in September and advance estimates suggesting growth stalled in October, continued below-potential growth should aid in bringing inflation closer to target.”

“We continue to favour a 25 basis point hike next week, although this call is sensitive to the jobs data scheduled later this week.”

“The fact that the loonie weakened following the report doesn’t seem to be a reaction to the Canadian data given its slight delay and similar moves in most other G10 currencies.”

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS AT SCOTIABANK

“The Canadian economy remains on fire. It’s one of the best-performing economies anywhere on the planet. For the Bank of Canada, what it says is we’ve got an economy that continued to push well into excess aggregate demand in the third quarter and so that’s going to frustrate their efforts to try to cool inflation.” (Reporting by Maiya Keidan and Fergal Smith Editing by Denny Thomas)

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