TD sees 'barn-burner' economic growth in Q3 - Action News
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TD sees 'barn-burner' economic growth in Q3

The Canadian economy is set for a 'barn-burner' third quarter with three-per-cent growth expected, economists at TD Bank say, but they also warn that trend won't continue for long.

Return to modest growth seen for 2017, 2018

Following a second-quarter contraction of 1.6 per cent due to weak exports, slow consumer spending and the effects of the Fort McMurray wildfire, TD said manufacturing activity picked up, oilsands output rebounded, and exports grew in July. (Reuters)

The Canadian economy is set for a 'barn-burner' third quarter, economists at TD Bank say, but they also cautionthat trend won't continue for long.

Following a second-quarter contraction of 1.6 per cent due to weak exports, slow consumer spending and the effects of the Fort McMurray wildfire, TD said manufacturing activity picked up, oilsands output rebounded, and exports grew in July.

TD said growth for the June-September period is set to grow at a pace of about three per cent.

"However, Canadians shouldn't be misled into thinking that this momentum will hold," TD said."Once one-off factors roll off, growth will drift back to a more modest 1.7 per centto 1.8 per centpace through 2017 and 2018."

Temporary surge

Even with healthy third quarter growth for the economy,2016 as a whole is expected to grow by only a "meagre"1.1 per centpace, the bank said.

That tepid growth meansjob gains are expected to be modest. TD seesthe unemployment rate remainingnear 6.9 per centthrough most of 2017, and then improving slightly to 6.7 per cent by the end of 2018.

TD said it seeslittle reason for the Bank of Canada to alter its stance on interest through the end of 2018.

"The hurdle on additional interest rate cuts is high, but a cut is still more likely than a hike at this point," the bank said.

TD's release follows a speech earlier this week by Bank of Canada governor Stephen Polozin which he warned Canadians to be prepared for slow economic growth in a low-interest rate environment.