OTTAWA—The Canadian economy picked up a bit of steam in November, growing slightly more than expected as the manufacturing sector regained much of the ground it lost the previous month.
Statistics Canada said Jan. 31 real domestic product grew by 0.4 per cent in November compared with the 0.3 per cent gain that had been anticipated by economists, according to Thomson Reuters.
The result for October was also revised to show the economy shrank by 0.2 per cent compared with an initial reading of a 0.3 per cent contraction.
The rebound in November was broad-based, though analysts took particular note of the strengthening manufacturing sector. It gained 1.4 per cent following an abysmal performance in October that saw a 1.7 per cent decline.
“After the surge we saw in export volumes in the trade report for November, a healthy print from the manufacturing sector was to be expected,” CIBC economist Nick Exarhos wrote in a report.
“Still, there’s a lot of work to be done in the sector, with output up only a slim 0.6 per cent from a year ago. Investment intentions point to a needed upturn in capacity for the year ahead, but we’ll need to see a bit more vigour in exports to see those plans materialize.”
Other sectors that helped boost growth for the month included the mining, quarrying, and oil and gas extraction group, which expanded by 1.4 per cent, as well as the finance and insurance sector, which gained 1.5 per cent. The construction group added 1.1 per cent.
For November, goods-producing industries rose 0.9 per cent, while service-producing industries gained 0.2 per cent, helped by finance and insurance, retail trade and transportation and warehousing.
TD Bank senior economist Brian DePratto called the November report “one of the healthiest monthly GDP reports in recent memory.”
He said growth in the fourth quarter of 2016 is likely to come in ahead of the Bank of Canada’s expectations of 1.5 per cent, but a significant amount of economic slack will nevertheless remain.
“As such, the Bank of Canada will probably be happy to leave its policy interest rate at 0.5 per cent well into the future, helping to support the ongoing absorption of the remaining slack,” DePratto wrote.