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Recent Canadian GDP data indicates that the economy expanded at a healthy 3.3% annual rate in the second quarter of 2022 following a 3.1% expansion in the previous quarter.

In money terms, nominal GDP expanded at a 17.9% annual rate in Q2, which also represented an extremely strong performance.

Canada’s personal saving rate has been declining over the past twelve months but is still far above its pre-pandemic level, which suggests that there is still considerable potential buying power around.

The surprisingly strong Canadian expansion in Q2 was due to an unusually powerful surge in consumer spending (a 9.7% annual rate) and a massive 13.9% lift in business investment. 

Nevertheless, offsetting these positive factors were several ominous signs -- including a massive contraction (27.6%) in real residential expenditures, as well as a smaller but still huge drop in government spending. Foreign trade was also a substantial drag on the Canadian economy in the second quarter.  

Moreover, despite numerous signs of a continuing tight jobs market, total Canadian employment declined by 40,000 jobs in August, following two previous monthly declines in employment. As well, the Canadian unemployment rate rose to 5.4% from 4.9% in July.

The decline in Canadian employment in August was due to a loss of 77,000 full-time jobs, though part-time employment registered a 38,000 job increase. Of course, the previous month’s  4.9% unemployment rate was a fifty-year low level, so Canada’s jobs market is still very tight.

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