Canada GDP per capita (USD)

Economy records weakest reading since Q2 2021 in Q4

GDP was flat in seasonally adjusted annualized rate terms (SAAR) in the fourth quarter, below the 2.3% expansion seen in the third quarter. Q4’s reading marked the worst result since Q2 2021, and undershot market expectations. However, the reading was dampened by a slower inventory accumulation and underlying momentum was more robust than the headline data suggested, with ongoing growth in consumption and exports.

Household spending increased 2.0% in the final quarter, which contrasted the third quarter’s 0.4% contraction. A robust labor market and easing price pressures likely supported the Q4 figure. Public spending growth moderated to 2.4% in Q4 (Q3: +4.8% SAAR). Meanwhile, fixed investment fell at a milder rate of 2.6% in Q4, following the 6.7% contraction recorded in the previous quarter.

Exports of goods and services growth fell to 0.8% in Q4 amid soft demand abroad (Q3: +10.6% SAAR). In addition, imports of goods and services declined at a steeper rate of 12.0% in Q4 (Q3: -1.8% SAAR), marking the worst reading since Q2 2020. As a result, net trade contributed positively to overall GDP.

On an annual basis, economic growth waned markedly to 2.1% in Q4, from the previous quarter’s 3.8% growth. Q4’s reading marked the slowest expansion since Q1 2021.

Flash data suggests the economy grew 0.3% month on month in January thanks to increases in mining, energy, wholesale and transport sectors, among others.