Canadian GDP posts gain for November

A rebound in manufacturing output helped revive the Canadian economy in November, according to a report from Statistics Canada released Tuesday.

Canadian GDP rose 0.4 per cent, reversing the contraction of 0.3 per cent recorded in October.

StatsCan said the return to growth resulted from higher output in manufacturing, mining, quarrying, oil and gas extraction, finance and insurance, and construction.

Simply put, Canada made more stuff in November. Output from goods- producing industries rose 0.9 per cent, reversing the one per cent decline in October. Services, such as finance and insurance, retail trade, and transportation and warehousing, rose 0.2 per cent.

“Canadians were busy in November, resulting in one of the healthiest monthly GDP reports in recent memory,” said Brian DePratto, senior economist with TD Economics.

“It was a warm November, and growth also came in hot for the Canadian economy,” said Nick Exarhos of CIBC World Markets.

StatsCan says the November report shows the Canadian economy has grown in five out of the last six monthly GDP reports. Manufacturing is a big part of this. “With the exception of October, outputin the manufacturing sector has risen every month since June,” StatsCan said.

There were some weak spots. Utilities, agriculture and forestry sectors declined during November. So did real estate, rental and leasing, and wholesale trade.

Still, the announced data slightly exceeded expectations. Most analysts had expected the economy grew 0.3 per cent in November.

“Canadian real GDP grew a solid 0.4 per cent in November, stronger than expected and setting the economy back in growth mode after contracting in October,” said Robert Kavcic, senior economist with BMO Capital Markets. When StatsCanada releases fourth quarter data a month from now, BMO expects the report will show the Canadian economy grew 2.0 per cent on an annualized basis. The November data keeps that forecast intact, Kavcic said.

The November GDP report doesn’t describe an economy that is growing so fast the Bank of Canada might have to hike rates to contain inflation. Yet it removes some of the downside risks that would have led the Bank to consider rate cuts to stimulate growth. “This report simply reinforces our view that they’re firmly on hold,” Kavcic said.

“For the Bank of Canada, the November GDP figures are not likely to move the needle very much,” DePratto said. “The Bank of Canada will probably be happy to leave its policy interest rate at 0.50 per cent well into the future, helping to support the ongoing absorption of the remaining slack.”