Shaking off a storm-battered December, the Canadian economy managed to grow at a better-than-expected 2.9-per-cent annual pace in the final three months of the year.
That was in spite of a 0.5-per-cent monthly contraction in December, due mainly to the effects of a massive ice storm that knocked out power to hundreds of thousands of homes in central Canada.
The Bank of Canada had expected the economy to grow 2.5 per cent in the fourth quarter.
It marked the best quarter for the Canadian economy in more than two years, eclipsing the United States, where growth was revised down to 2.4 per cent annualized on Friday, from a previous estimate of 3.2 per cent.
And it was faster than the 2.7-per-cent growth recorded in the third quarter.
Statistics Canada reported that quarterly growth was powered by oil-and-gas and mining production, manufacturing, household consumption and higher business inventories. The public sector, finance and insurance, retail and wholesale trade also increased.
That was partly offset by declines in business investment, construction and agriculture.
But economists were quick to point out that the Canadian economy’s performance isn’t quite as impressive when you unpack the details. Building up of inventories contributed about half the growth, with debt-burdened households doing much of the rest.
“There was little breadth in the sources of growth,” Scotiabank economists Derek Holt and Dov Zigler pointed out in a research note.
Bank of Montreal chief economist Douglas Porter called the GDP report “a mixed bag,” pointing out that 2014 is off to a “wobbly” start. Nonetheless, he said the economy “looks to have had better momentum than widely appreciated,” after significant upward revisions to growth estimates from earlier in the year.
For 2013 as a whole, gross domestic product expanded at a 2-per-cent annual rate, just slightly better than the 1.7-per-cent pace in 2012.