Household savings rose in the third quarter, while spending stayed flat, according to Statistics Canada data released on Friday that also showed strong GDP growth of 0.6% (2.6% annualized).
Final consumption expenditure fell 0.1% in the third quarter. Decreased spending on passenger vehicles (-2.3%) was offset by increased spending on rent and financial investment services.
The household saving rate rose 4.7% in the third quarter, as gains in disposable income (0.8%) slightly outpaced nominal household spending (0.7%).
Disposable income gains were mainly due to increases in wages and salaries, followed by higher self-employment income and investment income. Investment income rose 1.1% in the third quarter, driven by higher domestic dividend income.
Household property income payments declined 0.6% in the third quarter. With a reduction in the Bank of Canada’s policy rate, lower interest paid on mortgages accounted for more than two-thirds of the decline.
Employee compensation rose 1.1% in the third quarter, following a 0.3% increase in the second quarter. Wages were up in all industries except for federal government public administration, which fell 4.2% (that figure excludes the military).
Major contributors to wage growth were professional and personal services (1.1%), finance, real estate and company management (1.7%) and health care and social assistance (1.2%).
Compensation growth was the highest in New Brunswick (1.7%) and the lowest in B.C. (0.2%).
The increase in GDP for the quarter was driven by a strengthening trade balance and increased capital investment was driven by government capital spending. This was moderated by declines in household and government final consumption expenditures and slower accumulation of business inventory.
Capital investment by all levels of government increased 2.9% in the third quarter, led by an increase in spending on weapon systems (82%). Governments also increased investment in non-residential structures, particularly institutional buildings.
Meanwhile, business capital investment remained unchanged in the third quarter, as increased investments in residential structures (1.6%) and engineering structures (0.2%) were offset by declines in machinery and equipment (-2.7%), non-residential buildings (-1.5%) and intellectual property (-0.6%).