Canada’s economy grew faster over the last year than previously estimated, according to three decades of revisions published today by the country’s statistics agency.
Gross domestic product expanded at a 1.9 percent annualized pace between April and June compared with the prior reading of 1.8 percent, Statistics Canada said today in Ottawa. The fourth-quarter growth rate was increased to 2.1 percent from 1.9 percent and the third quarter pace rose 1.3 percentage points to 5.8 percent. The changes add C$12 billion ($12.2 billion) to output last year, taking it to C$1.762 trillion.
The revisions aren’t big enough to prompt a change in course from Bank of Canada Governor Mark Carney or Finance Minister Jim Flaherty, said Mark Chandler, head of fixed-income strategy at Royal Bank of Canada’s RBC Capital Markets unit in Toronto. Carney has kept his key lending rate at 1 percent for more than two years and signaled his next move may be an increase as the economy recovers.
“The effects aren’t huge,” and the economy remains “pretty close to potential,” Chandler said by telephone. Other indicators such as the inflation rate suggest Canada’s economy still has slack, he said.
Bank of Canada spokesman Jeremy Harrison said the central bank will take the revised figures into account when it updates its economic forecast later this month.
“We don’t provide real-time comments on the implications for the outlook of each new piece of data as it comes out,” Harrison said. “We are entering into the process of updating our outlook for the October Monetary Policy Report and the national accounts revisions, as well as all other data and information, will be reflected in this revised outlook.”
Statistics Canada raised the average estimate for annual economic growth over the last three decades by 0.14 percentage points after adjusting for inflation. The largest increase was by 0.4 percentage point in 2008, before the last recession began, and the largest drop was a 0.4-point subtraction in 1999.
The figures made “no substantial change” to the course of the world’s 11th largest economy since 1981, Statistics Canada said, while giving a more complete growth picture. The revisions adjust the so-called national accounts to meet standards set in 2009 by groups including the United Nations and International Monetary Fund.
The report did show the recession from the end of 2008 through mid-2009 was steeper than earlier figures showed. The economy shrank at annual rates of 1.1 percent in the fourth quarter of 2008 and 2.2 percent in the first three months of 2009, versus prior readings of 0.9 percent and 2 percent, Statistics Canada said.
The nominal level of 2007 gross domestic product was raised by C$36.4 billion, or 2.4 percent of the total, the agency said. The biggest reason for faster growth rates was the reclassification of some military spending as investment, Statistics Canada said. The agency set 2007 as the reference year it will use to adjust output figures for inflation.
Household disposable income was lowered by C$45.1 billion, or 5 percent of gross domestic product. Statistics Canada shifted expenditures from households into new categories such as non-profit organizations that serve households.
Other changes to the national accounts will be made over the next few months, with revisions for labor productivity due on Oct. 12. The last revision of this sort was done in 1997.