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The Canadian economy expanded 0.3 per cent in August, building off of 0.6 per cent growth in July. Nearly all major industrial sectors registered growth in August, led by oil and gas and major Canadian service sectors like retail and wholesale trade.

With today’s release, we now have two months of GDP data for the third quarter. Our quarterly tracking estimate is currently pointing at growth north of 2 per cent and, barring substantial underperformance in September, possibly as strong as 2.5 per cent which would well exceed the Bank of Canada’s recent forecast of 1.8 per cent. However, stronger third quarter growth has been somewhat artificially boosted by a recovery of output lost due to summer flooding in Alberta and labour disruptions in Quebec. Therefore it is unlikely that growth is accelerating beyond what the Bank of Canada is currently factoring into its interest rate decisions.  

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