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Canadian Economy Accelerates Faster Than Forecast

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Canadian Economy Accelerates Faster Than Forecast

The Canadian economy accelerated at a faster pace than expected in October, a sign the world’s eleventh largest economy has entered a period of sustained growth.

Canadian gross domestic product expanded 0.3 percent in October, following a 0.3 percent gain the prior month. A median estimate of analysts polled by Bloomberg called for a 0.2 percent gain.

Gains were led by manufacturing and wholesale trade. Manufacturing output increased 1.3 percent, led by non-durable goods orders. Wholesale trade expanded 1.4 percent on sales growth in machinery, equipment and supplies, the federal statistics agency said.

Retail trade accelerated 0.3 percent in October, down from 1 percent the prior month. Construction output was unchanged, as growth in engineering and repair construction was offset by a decline in residential building.

Compared to a year earlier, the Canadian economy expanded 2.7 percent in October, the fastest pace since May 2012, when the economy expanded at an annualized rate of 2.9 percent. The Canadian economy has been in expansion mode for four consecutive months, uprooting an unexpected fall in GDP in June. Canada’s GDP contracted that month due to flooding in Alberta and a two-week construction strike in Quebec.

The Canadian economy will accelerate at an annualized rate of 2.3 percent this quarter before reaching 2.6 percent at the end of 2014, according to the Bank of Canada. Back in October the BOC ended its rate hike warnings and slashed its growth outlook on the Canadian economy this year and next, citing sustained headwinds in the global economy.

The BOC expects the Canadian economy to expand 1.6 percent this year and 2.3 percent next year. According to BOC Governor Stephen Poloz, the economy will return to full capacity in 2015.

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