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A construction worker works on building new homes in Calgary, in this file photo. Canada’s household saving rate eased to a near five-year low of 3.6 per cent in the fourth quarter of 2014, the third-straight quarterly decline, Statistics Canada said Tuesday as it released gross domestic product data.TODD KOROL/Reuters

Fissures are starting to show in the Canadian economy, and they're not just from oil prices.

Canada's household saving rate eased to a near five-year low of 3.6 per cent in the fourth quarter of 2014, the third-straight quarterly decline, Statistics Canada said Tuesday as it released gross domestic product data. The saving rate is defined as the ratio between net saving of the household sector and household disposable income.

Consumers have long buoyed Canada's economy. In the fourth quarter, the country's GDP expanded by a 2.4-per-cent annual pace, topping forecasts though slower than the 3.2-per-cent rate of the prior quarter. Consumer spending along with a buildup in inventories underpinned growth.

Lower gasoline prices and still-low borrowing costs should have given breathing room to consumers in the quarter. Instead, they had to dip into their savings to finance consumption. At the same time, household debt is near a record. As a result, Canadians are getting squeezed, leaving them with little to cushion against an unexpected event, such as a job loss.

"The decline in the savings rate to the lowest since 2010 is … not good news for consumption this year," said Krishen Rangasamy, senior economist at National Bank Financial.

The report comes as the Bank of Canada is set to announce its rate decision Wednesday.

Most analysts expect the central bank will stand pat after it unexpectedly cut its key lending rate in January.

The central bank, which cautioned that lower oil prices will have an "unambiguously negative" impact on the Canadian economy, is trying to balance that against the indebtedness of Canadian households.

Lower oil prices mean lower Canadian income, Bank of Canada Governor Stephen Poloz said last week, adding that the oil-price shock will worsen the debt-to-income ratio of households, "thereby increasing financial stability risks."

Business investment and trade, two areas the central bank is counting on to propel growth going forward, both slumped in the fourth quarter.

Given that the Canadian dollar has weakened further since then, making Canadian exports more competitive, the sector "should eventually be poised for a revival if global demand does not falter," noted Arlene Kish, senior principal economist at IHS Global Insight.

For now, the buildup in inventories "doesn't bode well for production and hence growth in early 2015," Mr. Rangasamy said. That, combined with an expected slowdown in consumption, point to soft growth in the first half of this year, he added.

Momentum will also slow as the impact of lower oil prices starts to bite.

"The true damage to the Canadian economy caused by crude's collapse will only be understood in upcoming data releases given the lags involved in employment and capital spending," CIBC economists Avery Shenfeld and Nick Exarhos noted.

The household saving rate is the lowest since the first quarter of 2010. The current household saving rate, at 3.6 per cent, has ebbed from 5.9 per cent in early 2013. By contrast, in 1982, the rate was as high as 19.9 per cent.

For last year as a whole, household disposable income – in current dollars – grew 3.4 per cent, the slowest pace in five years, the agency said. Consequently, the household saving rate ebbed to 4 per cent from 5.2 per cent a year earlier. That decline came in the same year that the household debt-to-income ratio rose to a record 162.6 per cent.

All told, Canada's economy grew 2.5 per cent last year, the strongest showing since 2011. Ms. Kish, at IHS, believes growth this year will be "considerably" lower than last year's pace.

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