Gross domestic product (GDP) grew 0.3% in October, led by strength in the mining, quarrying and oil and gas extraction sector, following an increase of 0.2% in September.
Statistics Canada reported Monday that the growth occurred as service-producing industries advanced 0.1% for the month, marking the fifth consecutive month of increases.
Meanwhile, after four consecutive monthly declines, goods-producing industries increased 0.9%.
Mining, quarrying and oil and gas extraction grew 2.4% in October, with all three subsectors up. Oil and gas extraction was the largest contributor, with an increase of 3.1%.
The manufacturing sector increased 0.3% during the month, following four consecutive monthly declines, thanks to an increase in non-durable goods manufacturing.
Andrew Grantham, senior economist at CIBC, called October's economic gains “a bigger step forward than expected,” with the results coming in slightly above consensus estimates. However, he noted that early data for November suggests that “the economy stumbled again that month.”
Early estimates from Statistics Canada for November indicate that the month's real GDP edged down 0.1%, with declines in the mining, quarrying, and oil and gas extraction sectors. gas, transportation and warehousing, and finance and insurance were partially offset by increases in accommodation and food services and real estate and rental and leasing services .
“Despite this monthly volatility, fourth quarter GDP is still slightly below Bank of Canada projections [rapport sur la politique monétaire] and the long-term potential of the economy,” Grantham said in a note.
For this reason, he adds that the central bank will likely cut its key rate by a quarter of a percentage point at its next meeting in January, rather than the half-percentage-point cuts it made in his last two decisions.
“While there is evidence that interest rate sensitive sectors of the economy [c’est-à-dire l’immobilier, les ventes au détail] have already strengthened since the Bank of Canada cut rates, further easing of interest rates will be necessary in the new year to help close the output gap,” he explains.
Other sectors
Real estate and rental and leasing services increased 0.5%, recording their sixth consecutive monthly increase and the largest since January. That came as national home sales climbed during the month, largely on increased activity in markets such as the Greater Toronto and Greater Vancouver areas.
The sector has seen the highest monthly activity since April 2022.
Meanwhile, the construction sector grew 0.4% in October, led by the construction of non-residential buildings.
Wholesale trade increased for a second consecutive month, posting growth of 0.5%. Building materials and supplies were one of the largest contributors to the sector's growth, driven by an increase among merchant wholesalers of lumber, plywood and millwork.
Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, says he expected GDP growth of almost 2% in the fourth quarter.
“If this dynamic continues, it could influence the Bank of Canada's decision in January, which could slow the pace of rate cuts in the new year,” he said in a statement.
“That said, we remain pessimistic about the challenges ahead, with tariffs, reduced immigration targets and increased uncertainty clouding the outlook for businesses. It is nevertheless encouraging to see the economy post a final GDP point for the year on solid footing. »
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