A revival in the Canadian manufacturing sector has boosted
economic growth and raised hopes of a stronger 2011, according to a report.
Exceeding expectations, the economy registered a 0.4% growth
in November, over the previous month. The gain was expected to be at 0.3%
following an increase of 0.2% in October. The rise was also the strongest since
2010 March, when there was a 0.5% increase in GDP.
The services sector saw a 0.5% expansion in November 2010
while utilities grew by 1.5%. Oil and gas extraction as well as mining saw a
1.3% increase. An 11% increase in US vehicle sales with a double digit growth
forecasted this year, has contributed to the production rise in Ontario’s auto
plants. Automakers plan a 25% jump in production in the first few months of
2011, according to Bank of Nova Scotia. An indicator of this rebound was the Canadian
job data for the month of December, which registered 66,000 more positions in
the manufacturing sector.
Consumer morale and better performing small businesses have
contributed to the optimism, with the Bank of Canada expecting a 2.4% growth
this year.
Increased momentum is also something that neighbor USA is
experiencing. Consumer spending last December was up 0.7% and above analyst
expectations. Manufacturing activity in the MidWest
saw a 22-year high. Banks have eased their lending standards while business
loans have seen robust growth in the period from October to December.
Despite the strong showing, economists warn that prevailing
large household debt and more stringent mortgage rules will discourage
borrowers looking to take out home
equity loans and mortgages.
