Loonie climbs, Statistics Canada reports economy grew by 0.3 per cent in October

TORONTO – The Canadian dollar rose Monday as Statistics Canada reported that the economy grew for the fourth consecutive month.

The loonie jumped 0.33 of a cent to 94.24 cents US.

The federal agency said gross domestic product for October came in at 0.3 per cent. Output from goods-producing industries were up 0.4 per cent, mainly from the manufacturing sector, while output from service industries was up 0.3 per cent, with almost all the major industrial sectors showing growth.

Economists had expected the GDP to grow by 0.2 per cent in October, compared with September’s increase of 0.3 per cent.

Fred Ketchen, a manager of equity trading for ScotiaMcLeod, said the Canadian dollar has benefited from a recent good economic news.

“Our dollar is seen as a strong currency. We’ve got an economy that is growing more than expected and that adds support,” he said.

“Things in Canada are not totally robust, but it’s not a disaster anywhere. There is a general acceptance of modest growth.”

Ottawa also reported Monday that it ran a deficit of $2.5 billion in October, unchanged from the same month last year. The monthly fiscal monitor says Ottawa’s revenue slipped by $100 million, while increased revenue from personal income tax and other sources was offset by lower revenue from corporate taxes and GST.

In October, the government increased program spending by $100 million, while public debt charges fell $200 million. For the fiscal year so far, the deficit stands $13.2 billion, compared with a deficit of $11.9 billion at the same time last year.

Meanwhile, the Bank of Canada also announced that its deputy governor John Murray will retire next year, the second pending departure from the central bank’s upper ranks.

Murray will step down on April 30, a day before senior deputy governor Tiff Macklem is set to leave to become dean at the Rotman School of Management at the University of Toronto.

Murray, who has been a deputy governor since in January 2008, has overseen the bank’s analysis of domestic and international economic developments.

Meanwhile, there was also more positive news from the U.S.

The Commerce Department reported that Americans increased their spending in November by the most in five months as their income edged up modestly.

It said consumer spending rose 0.5 per cent from October, when spending had risen 0.4 per cent. It was the best showing since June. The gain was driven by a jump in spending on long-lasting durable goods such as autos.

Consumers’ income rose 0.2 per cent, an improvement from a 0.1 per cent decline in October. Wages and salaries, the most important component of income, rose a solid 0.4 per cent. The gain reflected strength in the private sector and a modest gain in government pay.

In contrast, commodity markets weakened amid low trading volumes. February crude lost 41 cents to US$98.91 a barrel, while gold prices were lower with the February contract down $6.70 to US$1,197 an ounce.

Bullion prices have fallen sharply since last week following the Fed’s announcement that it will begin scaling back its monthly asset purchases by $10 billion to $75 billion beginning in January.

“It’s in a range now. It’s been in that range for a long time and I don’t see it leaving that range,” Ketchen said of gold.

The March copper contract was unchanged at US$3.31 a pound.