Canada: Economic activity rebounds in October
The economy expanded 0.3% month-on-month in October, following a 0.1% contraction in September and beating analysts’ expectations of a 0.2% expansion. According to Statistics Canada, 15 of the 20 industrial sectors posted gains over the previous month, while manufacturing was the main driver behind October’s reading, nearly canceling out the losses recorded in September and August. The finance and insurance and wholesale trade sectors also performed well. Moreover, oil and gas extraction increased in October, although the rest of the mining, quarrying, and oil and gas extraction sector was down.
On an annual basis, growth ticked up to 2.2% from 2.0% in September. Meanwhile annual average growth inched down to 2.5% from 2.6% a month earlier.
Responding to October’s GDP reading, Brian DePratto, senior economist at TD, noted:
“Not too shabby. After a couple of months treading water, the Canadian economy recorded a solid expansion in October. The breadth of the expansion was particularly encouraging, even as construction activity remained a weak point for a fifth straight month.”
Nevertheless, DePratto’s outlook on the economy remained downbeat:
“November saw the worst of the discounts on Canadian oil blends, and voluntary production curtailments are likely to weigh on activity […] This will sap overall growth, even before mandatory production cuts come into effect in January, expected to drag 2019Q1 growth lower by roughly a percentage point.”