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This article was published 23/11/2010 (3515 days ago), so information in it may no longer be current.
OTTAWA -- North American consumers are showing signs of emerging from hibernation in time for Christmas, pushing up inflation in Canada to a two-year high and improving growth prospects for the United States, too.
Canada's inflation rate rose a surprising half-point to 2.5 per cent in October, a sign the economy is not facing the imminent risk of a deflationary slump.
In conjunction with price firmness, Statistics Canada also reported Tuesday that retail sales jumped 0.6 per cent in September as consumers bought more cars and spent more on sporting goods, clothing, books and music.
Although Manitoba consumers took a bit of a breather in September -- the province's retail sales dipped 0.3 per cent to just under $1.33 billion -- they've helped lead the retail recovery this year, with Manitoba posting the country's biggest year-over-year increase in retail sales for the first nine months of 2010.
StatsCan said Manitoba retailers rang up just under $11.6 billion worth of sales in that period. That was an increase of 6.3 per cent from the $10.9 billion racked up during the first three quarters of 2009 and more than one per cent better than the national average increase of 5.2 per cent.
The retail sales numbers were one of three new pieces of economic news Manitoba received Tuesday.
StatsCan also reported that despite a spike in the cost of living in October, Manitoba was still tied with Alberta for the country's lowest annual inflation rate at 1.2 per cent. In September, Manitoba was alone at the top with an annual inflation rate of only 0.5 per cent.
And a new provincial forecast from the Conference Board of Canada said Manitoba's economic recovery is picking up steam. It predicts the province will follow up this year's tepid 0.7 per cent growth in real GDP with 2.3 per cent growth in 2011 and a 2.5 per cent gain in 2012.
The conference board said Manitoba and Saskatchewan are expected to be the only two provinces to post stronger economic growth next year.
The strength of the consumer was also evident in the U.S., where the third-quarter gross domestic product was revised to 2.5 per cent from a previously reported two per cent.
The three data points are positive indicators for the North American economy, which had been under pressure in the past few months, and for retailers, with Christmas shopping season approaching, said Douglas Porter, deputy chief economist with BMO Capital Markets.
"Today's numbers do suggest the economy had a little more underlying momentum than previously believed," he said. "The consumer spending numbers are not rock-and-sock-'em, but they are solid."
TD Bank's chief economist, Craig Alexander, also doubted the better consumer spending data signalled a return to "booming" sales, saying the increase should be kept in context.
-- The Canadian Press/Staff
U.S. Fed pessimistic
WASHINGTON -- U.S. Federal Reserve officials have become more pessimistic in their economic outlook through next year and have lowered their forecast for growth.
The economy will grow only 2.4 per cent to 2.5 per cent this year, Fed officials said Tuesday in an updated forecast. That's down sharply from a previous projection of three per cent to 3.5 per cent. Next year, the economy will expand by three per cent to 3.6 per cent, the Fed said, also much lower than its June forecast.
Fed officials project that unemployment won't change much this year, averaging between 9.5 per cent and 9.7 per cent. It's now 9.6 per cent.
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