Revisions Paint Brighter Picture of Canadian Economic Expansion

(Bloomberg) --

Canada’s economic expansion was slightly more robust than initially estimated over the past two years, annual revisions show.

Growth in 2018 was 2% versus a preliminary estimate of 1.9%, Statistics Canada said Thursday from Ottawa. In 2017, growth was revised up to 3.2% from 3%, while the expansion in 2016 was pared back to 1% from 1.1%. The end result is an economy that was about C$5 billion ($3.8 billion) larger in nominal terms last year, and C$4 billion bigger when factoring out price changes, according to Bloomberg calculations.

The numbers suggest the economy may have had less slack than previously thought, potentially validating the Bank of Canada’s decision to continue raising interest rates at the time and its decision more recently to hold off on matching cuts to borrowing costs made by other major central banks including the Federal Reserve.

The composition of the new figures, however, is a mixed bag. Business investment is well below initially estimated levels, reflecting a downward revision in 2016. That was offset by higher estimates for government investment and spending on intellectual property. Overall, gross fixed investment in the economy was slightly higher in 2018 than previous estimates. Consumption spending from households was also revised down.

British Columbia and Prince Edward Island led growth in 2018, with the two provinces recording an expansion of 2.6% last year. Quebec came in close behind with growth of 2.5%. Newfoundland was the sole province whose economy contracted.

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net;Erik Hertzberg in Ottawa at eschmitzhert@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary, Chris Fournier

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