Canada’s economy is expanding at its fastest annualized rate in six years, Statistics Canada reported Thursday.
Canada’s gross domestic product grew by 1.1 per cent between March and June, an improvement from the 0.9 per cent growth seen in the previous three-month period.
That’s an annualized rate of expansion of 4.5 per cent, the highest the figure has been since the third quarter of 2011.
Economists were expecting the annual pace to be lower, at 3.7 per cent.
The Canadian dollar rose on the news, gaining more than a quarter of a cent to 79.60 cents US.
“Wow,” economist Brian DePratto at TD Bank said after the numbers came out.
“There seems to be no stopping Canada of late.”
DePratto said the strong quarterly showing likely means another Bank of Canada rate hike is now a “done deal” some time between now and the end of the year.
Within minutes of the report coming out, currency traders started raising the odds that the Bank of Canada will hike its benchmark interest rate when it meets next week.
As it stands, traders think there’s about a one in three chance of that happening. Yesterday, the odds of such a move were just over one in four.
The likelihood rises to more than 85 per cent between now and the end of the year.
The 4.5 per cent annualized growth pace is also 50 per cent higher than the pace at which the U.S. economy is growing, and another sign that policy makers may be getting ready to pump the brakes and keep inflation in check
“Even the naysayers will struggle mightily to find fault in this rock-solid report,” Bank of Montreal economist Doug Porter said.
“This suite of robust numbers all but locks in another rate hike this year — and we suspect that is the message they will send quite clearly at next week’s decision.”