Consumers drove third-quarter economic growth as COVID-19 restrictions eased

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Statistics Canada said on Tuesday that the economy grew at an annualized rate of 5.4 percent in the third quarter of this year as COVID-19 restrictions were eased and household spending increased.

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The result is a turnaround for the economy that shrank in the second quarter, and surpassed economists’ expectations for real GDP growth between July and September.

Statistics Canada said growth in household consumption for the quarter was the biggest on record and outpaced growth in disposable income, with the savings rate falling to 11 percent from 14 percent in the second quarter.

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Money went to high-contact services such as restaurants and hotels, which were the biggest contributors to the quarterly profit, as restrictions were eased and Canadians went back to a more normal spending pattern.

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The quarter ended in September with the economy growing 0.1 per cent.

The agency also said that preliminary data showed the economy grew by 0.8 percent in October to start the final quarter of the year.

Statistics Canada said that with that estimate, overall economic activity was down about 0.5 percent from pre-pandemic levels recorded in February 2020.

CIBC Chief Economist Avery Shenfeld wrote in a note that the results were a welcome economic surprise, but could be tainted by concerns about the new Omicron version of COVID-19.

He said the variant could pose a threat to the economy in the last quarter and beyond.

“The focus in the coming days will still be on whether the Omicron version, should this vaccine prove to be resistant, can set back the timing of the next phase of economic activity,” Shenfeld wrote.

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