The Canadian economy shrank 1.1% on an annualized basis in the third quarter of this year, according to Statistics Canada.
The federal agency says a decrease in international exports and slower inventory accumulation by businesses were partially offset by increased government spending and investment in housing.
Housing investment increased 2% in the third quarter after posting five consecutive quarterly declines. The 6.5% increase in new construction was partially offset by a 4.3% decline in property transfer costs, which represent resale activity.
On the other hand, the agency revised upwards its real gross domestic product (GDP) figure for the second quarter, noting that the economy did not shrink, but rather grew by 1.4% on a base annualized.
The Statistics Canada report shows that consumer spending remained stable for a second consecutive quarter and business capital investment declined by 2%.
The Bank of Canada’s interest rate hikes have put downward pressure on consumer and business spending as they both face higher borrowing costs.
Statistics Canada also observed that employee compensation increased by 1.3% in the third quarter and that net household savings also increased.
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