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Winnipeg Free Press - PRINT EDITION

Canada's economy ends year with a bang

Bodes well for jobs, corporate profits in 2011

By: Julian Beltrame

Posted: 03/1/2011 1:00 AM | Comments: 0 (including replies)

OTTAWA -- Canada's economy ended the year with a bang in 2010, setting the stage to a strong start this year that likely bodes well for jobs, corporate profits and government finances.

Statistics Canada said Monday the economy expanded a sprightly 3.3 per cent in the last three months last year, a full point more than the Bank of Canada had predicted and ahead of the U.S. pace.

The agency revised upwards the results of the third quarter to 1.8 per cent from one per cent, enabling the country to finish the year with an overall 3.1 per cent increase in gross domestic product.

And December's 0.5 per cent growth compared with November provided a strong hand-off to Q1 performance this year, economists noted.

"On balance, this report stands up to careful scrutiny in signalling greater than expected breadth of growth in the Canadian economy," said Derek Holt, vice-president of economics with Scotia Capital.

Commenting in the House of Commons, junior finance minister Ted Menzies noted that Canada had topped the G7 in the fourth quarter, and used the occasion to attack the Opposition.

"The last thing we want is for a Liberal increase of $6 billion on (corporate) taxes that will kill jobs, that will slow growth," Menzies said.

No economists mentioned corporate tax cuts, either those that have occurred or next year's scheduled additional 1.5 percentage point trim, as a reason for the strong quarter.

Instead, analysts pointed to the 17 per cent annualized surge in exports to the world, and especially to the United States, as the key contributor. Also helping out was a 4.9 per cent jump in consumer spending.

Meanwhile corporate profits rocketed up 41 per cent in the fourth quarter.

Bank of Montreal economist Douglas Porter said the strong hand-off points to the first quarter of this year coming in even better, at around 3.5 per cent.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition March 1, 2011 B6

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