Canada: Economic activity contracts for the first time in eight months in October
December 23, 2019
The economy shrank 0.1% month-on-month in October, contrasting September’s 0.1% rise and short of analysts’ expectations of another 0.1% increase. The dip in economic output was mainly the result of the General Motors September-October automotive strike in the U.S., which hindered manufacturing activity north of the border.
The manufacturing sector plunged 1.4% in month-on-month seasonally-adjusted terms, weighing heavily on the headline figure. Moreover, the wholesale and retail trade sectors also dragged on economic activity, both posting strong contractions and likely the result of wary consumers—despite the tight labor market and robust wage growth. On a brighter note, the real estate sector continued to expand moderately, while the utilities sector rebounded following two straight months of decline.
Commenting on October’s GDP reading, Brian DePratto, director at TD Economics, noted:
“Even penciling in a decent pop-back in activity for November, today's report sends our fourth quarter GDP tracking significantly lower, to just 0.5% annualized. If borne out, that pace of growth would, in an echo of the retail sales data, be the weakest in more than three years.”
Author: Steven Burke, Economist