Canada’s GDP for the fourth quarter of 2024 increased due to household spending, exports, and fixed capital formation. Year-on-year growth is at 2.6%, surpassing the 1.8% estimate, while month-on-month growth stands at 0.2%, slightly below the predicted 0.3%.

Household spending recorded a rise of 1.4% in Q4, the highest since Q2 2022, primarily due to new vehicles and financial services. Residential construction grew by 3.9%, the strongest since Q1 2021, supported by ownership transfer costs and new projects.

Business investment rose by 0.7%, with a notable 4.2% increase in machinery and equipment investment. The GDP deflator for Q4 was 0.9%, influenced by rising energy export prices, while the annual deflator for 2024 reached 3.0%.

Wage growth for Q4 rose by 1.0%, linked to expansion in the service sector. Annual wage growth was recorded at 5.9%, marking the slowest rate observed since 2020.

These figures illustrate a higher-than-anticipated expansion in overall economic activity, driven by stronger household consumption, exports, and business investment. While the economy demonstrated resilience, expectations had varied slightly, particularly in regard to short-term growth estimates.

The steady rise in consumer spending, particularly on vehicles and financial services, indicates that households maintained purchasing power despite concerns about borrowing costs. Property investment also played a role, with residential construction growth reaching its highest pace in almost three years. This was supported by new property developments and transaction-related costs, which suggest that housing demand remained healthy.

On the corporate side, the increase in machinery and equipment investment points to confidence among businesses, as firms expanded their asset bases to support production and efficiency. A positive shift in capital expenditures can lead to higher productivity in the long run, reinforcing future output growth.

Rising energy export prices contributed to the GDP deflator, indicating that trade conditions were affecting broader price levels. Inflation-linked growth in nominal output remains an element to watch, as it feeds into revenue expectations.

Wage growth data, while still indicating expansion, has slowed compared to prior years. A 1.0% rise in Q4 earnings reflects strength in certain industries, particularly services, yet the annualised pace of 5.9% marks the slowest increase since 2020. This suggests that while the labour market remains robust, momentum is moderating, which could affect disposable income levels in future quarters.

For those analysing short-term market movements, these figures provide useful insight into key economic drivers over the coming weeks. With consumer activity maintaining strength, businesses investing in growth, and wage increases slowing, economic signals appear mixed but lean towards resilience. Tracking these developments will be necessary when assessing expectations around policy decisions and market positioning.