By Courtney Tower

OTTAWA (MNI) - Canada's economy rebounded by 0.4% in September on strength in production of both goods and services, and pulled the third quarter into a 0.4% annualized growth indicating recovery from recession, Statistics Canada reported Monday.

The recovery in September, fairly robust across most segments of goods and services industries, achieved what economists had believed unlikely after negative or flat performances in successive previous months --- it lifted the third quarter into positive territory. It was, however, weaker than the 0.6% growth, or up to 1.0% growth, forecast by economists in recent days.

On a quarter-over-quarter basis, GDP increased 0.1%.

The 0.4% rise in GDP for the third quarter followed three consecutive quarterly contractions and ends the recession according to popular definition, two consecutive quarters of decline. Statistics Canada has a caveat to that definition, applying also the state of the country's unemployment, currently at 8.6%.

September's 0.4% gain over August's 0.1% decline, and GDP performance flat or negative in the four months before that, featured a 0.9% increase for goods-producing industries. It was their first increase since July of 2008, and was bolstered by rises of 1.1% in manufacturing and 5.6% in mining excluding oil and gas extraction.

In manufacturing, 15 of the 21 major groups advanced, especially in primary metals, beverages and tobacco, plastics and rubber products, and transportation equipment. In the automobile industry, vehicles alone were down 2.0% on the month but parts production was up 8.8%.

For services on the month, the increase was 0.3%, on the strength especially of retail trade (+1.1%) "Automotive products, as well as food and beverage stores, reported appreciable increases," Statistics Canada said. Wholesaling was up 0.4%.

There were monthly increases as well in construction (+0.2%), but declines in accommodation and food services (-0.4%), agriculture (- 1.9% in crops production and -0.4% in animals production). Utilities were down on weaker demand for both electricity and natural gas.

On the quarter, the output of services-producing industries grew by 0.6%, while goods industries declined by 1.4% --- a decline for goods that began in the third quarter of 2007.

** Market News International Ottawa **