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The Canadian economy rebounded sharply during the third quarter, however, the numbers were below expectations. Analysts at RBC Capital Markets point out that while spending on services is still very restrained, goods-producing sectors are doing better.

Key Quotes: 

“The 8.9% increase in Q3 GDP (40.5% at an annualized rate) didn’t meet forecasters’ expectations, but still marked a significant bounce-back in output with almost three-quarters of the total 18% March/April GDP drop retraced as of September.”

“The good news in today’s report is that the economy regained ground however the re-imposition of virus containment measures, although not as stringent to-date as those imposed in the spring, is putting a cap on the near-term recovery.”

“For businesses struggling with containment measures, the light at the end of the tunnel comes from recent vaccine news, as well as the high level of household savings. The combination of exceptionally large government income supports and the ‘forced’ savings for higher-income households who normally spend more on discretionary purchases resulted in household savings balances spiking a cumulative $160 billion relative to pre-COVID levels through the last three quarters.”