Canadian economy beats BOC forecast

Canada’s economy which came back on track in early 2010 started steaming ahead by the last quarter of 2010, according to a report by Statistics Canada.

Surging exports (4.0%) and strong consumers demand (1.2%). emerged as the leading growth engines that fuelled a 3.3% annualized rate of growth in the fourth quarter, up from 1.8% in the third quarter. In particular, purchases of durable goods grew 2.9%, far outpacing the third-quarter growth of 0.6%, said the report.

The performance far surpassed central bank’s January projection of 2.3 percent and in doing so beat out U.S. growth, of 2.8%, for the same quarter.

Real gross domestic product (GDP) rose 0.8% in the fourth quarter, led by exports. Final domestic demand advanced 1.2% while on a monthly basis, real GDP by industry increased 0.5% in December.

Business investment in plant and equipment expanded for the fourth consecutive quarter, while investment in housing fell for the second time in a row.

All major industrial sectors, with the exception of manufacturing, increased their output in the fourth quarter. Service-producing industries grew 0.9% while goods production increased 0.5%. The largest contribution came from mining and oil and gas extraction.

The public sector (education, health services and public administration combined), wholesale and retail trade, real estate and construction also contributed to the overall increase. Manufacturing declined following five consecutive quarterly increases.

For the year 2010 as a whole, real GDP grew 3.1%, following a 2.5% decline in 2009. Canada’s real gross domestic income, which measures purchasing power, rose by 1.3% in the fourth quarter. Canada’s terms of trade, a measures of export prices relative to import prices, spiked in the fourth quarter, expanding 1.6% following a 0.8% decline in the third quarter.

Nominal GDP rose 1.7% in the last quarter of 2010, while Labour income grew 1.4% as a result of rise in wages and salaries in both the goods-producing and services industries. Corporate profits increased 9.0%, up from 0.1% in the third quarter.

Personal disposable income was up 1.8% and the national saving rate was 4.8%, up from the third-quarter rate of 4.6%, as a result of increased saving in the persons and unincorporated business sector and in the corporate sector.