Canada's GDP growing at 2.8% pace

Canada's gross domestic product expanded at a 2.8 per cent annual pace in the past three months, Statistics Canada said [on Friday], much better than expected by economists.

An increase in exports and an uptick in household spending were the two main drivers of the increase...

The 2.8 per cent figure is well ahead of the 2.1 per cent that economists had been expecting — but still not as good as the 3.9 per cent pace of growth posted by the U.S. earlier this week...

Exports increased by 1.7 per cent. In the previous quarter, they rose by 4.4 per cent. Canada shipped out 2.2. per cent more crude oil during the period, the data agency said.

Friday's numbers cover July, August and September — for the most part, the three-month period before oil prices began their precipitous decline. So it should be interesting to monitor if oil exports stay strong even after prices have cratered...

The Bank of Canada had been expecting growth to come in at about 2.3 per cent, which means the reality is better than expected. Normally, that would be a sign the bank would be leaning toward hiking rates to slow down inflation. But in this case, it's likely the bank will think the strong GDP growth will be offset by sinking oil prices, which are down by almost 40 per cent from where they were this summer...

Another key Canadian industry, the auto sector, posted strong growth figures.

Canada exported 2.2 per cent more cars and trucks during the period, down from the 10 per cent gain in the previous quarter, but still a solid showing.

TD Bank senior economist Randall Bartlett said the falling oil prices "remain a dark cloud on the horizon" and noted that lower profits in the oil sector will weigh on production growth and capital spending.

But strength in all other parts of Canada's economy are maybe enough to offset that, he said...

This has been excerpted from 28 November 2014 article by CBC News.