Canada’s economic growth slowed much more than anticipated in Q4

Statistics Canada announced on Friday that the country’s gross domestic product (GDP) decreased a seasonally adjusted 0.1 percent m-o-m in December, following the same drop in November. Economists had forecast a flat m-o-m performance in December.

In the fourth quarter of 2018, Canada’s economy edged up 0.1 percent q-o-q after an unrevised 0.5 percent q-o-q growth in the third quarter. That was the slowest pace since the second quarter of 2016.

In y-o-y terms, the Canadian GDP rose 0.4 percent in the fourth quarter, compared to an unrevised 2.0 percent gain in the prior quarter and economists expectation of 1.2 percent y-o-y advance.

According to the report, real gross national income fell 1.0 percent, largely owing to lower export prices of crude oil and crude bitumen. Meanwhile, final domestic demand was down 0.4 percent as the investment continued to fall. 

The slowing of GDP in Canada in the fourth quarter mainly reflected a 2.7 percent drop in investment spending. Exports of goods and services (-0.1 percent) also edged down. These declines, however, were largely offset by higher inventory accumulation, as businesses accumulated $12.5 billion of non-farm inventory following the investment of $3.5 billion in the previous quarter. The economy-wide stock-to-sales ratio increased from 0.825 in the third quarter to 0.840 in the fourth quarter.