Canadian Economy Grows 1.7%, Unemployment Falls to Lowest Since 2008
- Canada third quarter annualized gross domestic product surpassed the expected 1.6% at 1.7%
- Unemployment falls to lowest rate since 2008 at 5.9%; part-time employment pops but overall participation comes in flat
- Positive economic data pushed the Canadian Dollar higher
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Gross Domestic Product
The Canadian economy grew at a rate of 1.7% which surpassed the expected 1.6% estimate. Household consumption was up 3.8% which was slightly lower than the second quarter at 4.7%. Net exports fell by 0.2% compared to an increase of 6.6% in the second quarter. Final domestic demand was at 3.7% for the third quarter, again, slightly lower than the second quarter 4.2%. Notably, non-profit consumption was up 6% in 3Q compared to 4.5% in 2Q.
Gross domestic product (GDP) is the headline measure of a country’s economic expansion, or contraction. It is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. GDP is a sum of personalconsumption expenditures, gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment.
Strong Employment Change, Flat Participation
Most of the data came from Canada’s employment report employment increased for the second consecutive month, up 89.5k in November. The unemployment rate fell by 0.4% to 5.9%, the lowest rate since February 2008.The increase in employment in November was largely attributed to private sector employees, as both public sector employment and the number of self-employed saw little changed.
Full-time employment rose by 29.6k compared to 88.7k in the period prior. This was a minor increased compared to the 49.9k increased in part-time employment (which decreased by -53.4k in the period prior). Overall labor force participation came in at 65.7% which was flat over the last period.
The largest share of national employment growth in November was recorded in Ontario, with 44k more people employed, mostly in wholesale and retail trade as well as in manufacturing. This partly reflects a seasonal change in employment attributable to holiday shopping.
Bank of Canada Normalization Policy
Today’s economic data may provide some indication that the Canadian economy is growing. However, it may be the case that change in employment is transitory and will level off within the coming months. Nevertheless, today’s economic data provides a case for the Bank of Canada to raise interest rates at their upcoming monetary policy meeting.
Below is a list of economic releases that has driven the Canadian Dollar higher:
-CAD Quarterly Gross Domestic Product Annualized (3Q): +1.7% versus +1.6% expected, from +4.5%
- CAD Net Change in Employment (NOV): 79.5k versus 10.0k expected, from 35.3k previous
- CAD Unemployment Rate (NOV): 5.9% versus 6.2% expected, from 6.3% previous
Chart 1: USDCAD 1-hour Chart (December 1, 2017)
The economic data from this morning spurred a rally in the Canadian Dollar. USDCAD traded lower by over 1% following the GDP and employment data. At the time that this was written, USDCAD traded at around 1.2749 erases the gains made earlier this week.
--- Written by Dylan Jusino, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.