The economy grew at an annual rate of 5.4 per cent in the third quarter of this year as COVID-19 restrictions eased and household spending rose, Statistics Canada said Tuesday.
The result is a turnaround for an economy that shrank in the second quarter and outpaced economists’ expectations for growth in real gross domestic product between July and September.
Statistics Canada said the growth in household consumption for the quarter was one of the largest on record and outpaced the growth in disposable income, dropping the savings rate to 11 per cent from 14 per cent in the second quarter.
Money went into high-contact services like restaurants and hotels that were the largest contributors to the quarterly gain, as restrictions eased and Canadians went back to more normal spending patterns.
The quarter ended with the economy edging up by 0.1 per cent in September.
The agency also said preliminary data suggests the economy grew by 0.8 per cent in October to start the final quarter of the year.
Statistics Canada said that with that estimate, total economic activity was about 0.5 per cent below the pre-pandemic level recorded in February 2020.
CIBC chief economist Avery Shenfeld wrote in a note that the results were a welcome economic surprise, but may be overshadowed by concerns of the new Omicron variant of COVID-19.
He said the variant could pose a threat to the economy in the final quarter and beyond.
“The attention in upcoming days will still be on how the Omicron variant, should it prove to be vaccine resistant, might set back the timing of the next leg up for economic activity,” Shenfeld wrote.