Q4 GDP Results Released by Statistics Canada

StatsCan today released the 4th quarter GDP results, showing no increase in economic activity in the thrid quarter. Year-over-year, preliminary results indicate the economy grew by 3.4%, led by a 4.8% increase in household consumption. Gross fixed capital formation, which includes non-residential construction, fell for the year by 1.5%, with residential construction taking the biggest hit (down by 11.1%). Non-residential structures, machinery and equipment grew by 7.8% in 2022, although it was down by 5.5% in Q4, mostly due to a decline in machinery and equipment. Non-residential construction actually grew by 2.5% in Q4. The rapid increase in the Bank of Canada's policy rate (from 0.25% in March to 4.25% by the end of the year) certainly had a dampening effect on housing activity, but did not noticeably rein in consumer spending. The 3.4% year-over-year increase is well below the 4.3% we forecast in December 2021. This is due to high inflation and tightening monetary policy, neither of which we (or most other forecasters) foresaw at the time. You can read the full StatsCan report here.