Canada’s economy expanded by 0.3% in the third quarter of 2024, a slowdown from the 0.5% growth recorded in the first two quarters. This pace aligns with market expectations but reflects a more moderate economic performance as certain sectors faced challenges. The overall growth rate points to a mixed economic landscape, influenced by both positive contributions from consumer and government spending and declines in other areas.

Household Spending Fuels Growth

One of the main drivers of Q3 growth was household consumption, which rose by 0.9%. Canadians spent more on new trucks, vans, SUVs, and financial services, indicating strong consumer activity in specific sectors. This trend underlines the importance of domestic consumption in bolstering the economy, even as other areas experienced slower momentum.

Government Spending Boosts the Economy

Government expenditures increased by 1.1% during the quarter, with higher spending seen across all levels of government. Public investment played a crucial role in maintaining steady economic growth, helping to offset declines in private sector investments. This demonstrates the government’s role in stabilizing the economy amid fluctuating market conditions.

Challenges in Trade and Business Investment

Despite gains in consumption and government spending, growth was hindered by slowing non-farm inventory accumulation, particularly in the motor trade sector, and reduced business investment in machinery and equipment. Additionally, net domestic demand weakened as exports contracted by 0.3%, while imports declined by 0.1%. These factors combined to create a more tempered growth environment. On an annualized basis, Canada’s economy expanded by just 1%, highlighting the need for strategic efforts to address these challenges moving forward.