GDP Grew 0.3 per cent in October

3 weeks ago

1 minute read

Statistics Canada reported that the Canadian economy grew by 0.3% in October, driven by gains in the mining, quarrying, and oil and gas extraction sector. This followed a 0.2% increase in September.

Services-producing industries grew by 0.1% in October, marking their fifth consecutive month of growth. Goods-producing industries, which had experienced four straight monthly declines, rebounded with a 0.9% increase.

The mining, quarrying, and oil and gas extraction sector saw a 2.4% rise, with all three subsectors contributing to the growth. Oil and gas extraction was the largest driver, increasing by 3.1%. Meanwhile, manufacturing edged up 0.3%, spurred by gains in non-durable goods manufacturing.

CIBC senior economist Andrew Grantham described October’s growth as a larger-than-expected stride forward noting it exceeded consensus estimates. However, he cautioned that early data for November indicates a slight contraction, with real GDP estimated to have declined by 0.1%. Sectors such as mining, transportation, and finance experienced decreases, partially offset by gains in accommodation, food services, and real estate.

Grantham predicts the central bank will likely implement a smaller interest rate cut of 0.25 percentage points in January, down from the previous half-point reductions.

Grantham noted that interest-sensitive sectors, including real estate and retail sales, are already showing signs of recovery.

Real estate and rental and leasing posted its sixth consecutive monthly increase, growing by 0.5%—the largest gain since January. This was supported by a rise in national home sales, particularly in the Greater Toronto and Greater Vancouver markets, which saw the highest activity levels since April 2022.

The construction sector expanded by 0.4%, driven by growth in non-residential building construction. Wholesale trade grew for the second straight month, increasing by 0.5%, with significant contributions from the building materials segment, including lumber and plywood wholesalers.

Canadian Chamber of Commerce senior economist Andrew DiCapua anticipates GDP growth of approximately 2% in the fourth quarter. He noted that this momentum could influence the Bank of Canada’s decision-making, potentially slowing the pace of interest rate cuts in early 2024.

Despite the positive end to the year, challenges like tariffs, reduced immigration targets, and rising uncertainty continue to pose risks for businesses.