Canada’s GDP rose by 3.1% in the third quarter, which was more or less in line with expectations.

“Domestically generated growth has started to ebb after starting the year with a bang,” says RBC Financial. “After growing by 3.7% and 4.4% in the first and second quarters of the year, real final domestic demand grew by a more moderate 2%. A pause in consumer spending in the quarter was largely responsible as consumption managed to eke out only a 0.5% increase. Consumption gains should resume at stronger pace going forward as the third quarter’s slowdown does not reflect solid household fundamentals. However, a pace of roughly 2.5% is expected as employment gains moderate from the supercharged gains seen so far this year.”

“Consumer spending was weaker than expected, just barely expanding during the quarter, and advancing by 2.9% year over year. Corporate profits continue to rebound, but the pace was more subdued in the third quarter, following two quarters of sharp gains,” says BMO Nesbitt Burns.

“Canada’s economy may be coming off the boil, but it is still bubbling along at a steady simmer — and all of the underpinnings are in place for it to remain warm over the next few quarters,” says TD Bank. “Much of the focus is likely to be on the domestic side of the economy, which will undoubtedly have some ringing the alarm bells. Notably, final domestic demand grew at a mere 2% annualized pace, and some components were unquestionably soft.”

“While there were certainly enough soft spots in this morning‚s report to get the doom-and-gloom crowd chattering again, there is, on balance, precious little to grumble about in Canada’s economic performance,” concludes TD. “Importantly, the domestic side of the economy is still sitting on solid foundations — which suggests that the cooler domestic picture is little more than a momentary lull. Still, with the U.S. economy running into rough waters in the final quarter of the year, a further loss in momentum is likely in the final quarter of the year, with growth clocking in at about 2.5%. However, the mix of growth is likely to shift away from exports — which will undoubtedly be squeezed in the months ahead — and back towards the domestic side of the economy, which will pick up a bit of steam in the final months of the year.”

“Canadian growth remained healthy, but is moderating, and there was nothing in today’s economic releases to doubt that the Bank of Canada will stay on the sidelines at least until March,” reports BMO Nesbitt Burns.

CIBC World Markets says, “The Bank of Canada wasn’t going to tolerate many more hot quarters, so the easing in third quarter GDP growth to 3.1% is in some sense welcome news.”

CIBC expects consumers to reappear in the fourth quarter, with exports fading significantly. “The final tally should continue to show Canada on a path to sub-3% growth, without any further “help” from interest rate hikes by the Bank of Canada. Note that today’s results were already below the forecast of 4% growth put out by the Bank in its last economic outlook.”