The Canadian economy boomed back in the fourth quarter of last year, pushing well past expectations and raising the likelihood that the Bank of Canada will start to raise interest rates this summer.
Real gross domestic product grew at an annual rate of five per cent, a full point above what analysts had expected and the largest quarterly increase in nearly a decade, Statistics Canada reported Monday.
The economy was up 1.2 per cent from the third quarter of 2009, the largest such jump since the third quarter of 2000, the agency said.
Real GDP, a closely watched inflation-adjusted measure of economic performance, increased 0.6 per cent in December alone, a fourth straight monthly advance.
"Between the structure of the strong fourth-quarter advance... and the robust monthly results, this report shouts strength," Bank of Montreal economist Douglas Porter said in a note to clients.
Porter said the data shows that Canada has made a clean break from the recession that began to sink its teeth into the economy in October 2008 and raises the odds that the Bank of Canada will begin to hike interest rates in July - and stay on that path.
The five per cent jump far outstripped a Bank of Canada forecast for 3.3 per cent growth on an annual basis and marked a major shift from the "devastating seven per cent decline in the first quarter of last year," Porter added.
The central bank has its next scheduled announcement on key lending rates today, but observers expect its overnight rate will remain where it is for now, at an all-time low of 0.25 per cent.