Canadian Real GDP Increases 0.3% in Q3

On Friday, Statistics Canada (StatCan) reported that Canadian real gross domestic product (GDP) in Q3 increased 0.3% on a quarterly basis, after rising 0.5% in both Q1 and Q2.

The contributions to GDP growth in Q3 from higher household and government spending were moderated by slower nonfarm inventory accumulation, lower business capital investment, and lower exports.

On a per capita basis, GDP fell 0.4% in Q3—the sixth consecutive quarterly decline.

Housing investment increased 0.8% in Q3, the first expansion since 2023Q3. The growth was due to higher ownership transfer costs, up 4.9%, which represent resale activity. Conversely, spending on renovations was down 0.4%, and new construction declined 0.1%. Increased work-put-in-place for new units—primarily singles and apartments—was offset by a marked decrease in absorptions of apartments in Ontario.

Household net saving increased in Q3 as disposable income increased 2.3%, at double the rate of spending—up 1.2% (in nominal terms). Disposable income gains were mainly due to wages and salaries, while the drag of rising interest costs lessened, as interest payments on mortgages and consumer credit declined 0.6%, a first since 2021Q3.

The Bank of Canada cut the policy interest rate by 75 basis points from June to September, and it announced further cuts in October. Consequently, the household saving rate reached a three-year peak of 7.1% in Q3, up from 6.2% in Q2. By comparison, the saving rate at the end of 2019 was below 3.0%. The household saving rate is aggregated across all income brackets; in general, saving rates are greater in higher income brackets.