Canada: GDP growth eases in November; preliminary estimate points to stable output in December
The economy expanded 0.6% on a month-on-month seasonally-adjusted basis in November, after growing 0.8% in October. Moreover, on an annual basis economic growth stayed stable at October’s 3.8% in November.
In November, the goods-producing industries grew at a softer pace due to declines in the following sectors: mining, quarrying, oil and gas, and utilities. Meanwhile, growth in the services-producing industries was stable in November.
In addition, Statistics Canada released a flash estimate for December’s GDP, which suggested that economic output was unchanged relative to November. Consequently, Q4 GDP grew 6.6% on a seasonally-adjusted annualized (SAAR) basis, which is up from Q3’s 5.4% rise. Furthermore, the economy for 2021 as a whole expanded 4.9%, contrasting the 5.2% decrease registered in 2020.
Commenting on the short-term outlook with regards to the spread of the Omicron variant, economists at TD Economics noted:
“Omicron dynamics hit Canada relatively harder under more severe and nationwide government restrictions. Canada shed 200,000 positions in January, pushing the unemployment rate to 6.5% from 6.0% in the prior month. […] The restrictions completely deflated an economic tailwind that had formed over the fall months and [was] expected to goose the first quarter with 5% growth. Instead, we have cut GDP growth to just 0.5% (SAAR) for [Q1] and we would not be surprised by a negative print. The recent blockades of border crossings add to that near-term downside risk.”