Canada: GDP growth hits six-month high in November as nearly all industries expand, plant shutdowns end
January 31, 2018
GDP bounced back in November on strong manufacturing gains, a turnaround from October when temporary factory shutdowns across industries stalled economic growth. In November, GDP grew 0.4% in monthly terms—the strongest print in six months and an impressive return to growth following October’s flat reading. November’s expansion met market analysts’ expectations, who had expected a surge of output as Canadian plants got back online following planned maintenance in September and October.
November’s print, released by Statistics Canada, recorded nearly broad-based growth across 17 of the 20 included industrial sectors. Goods-producing industries posted strong growth, led by the fastest expansion of manufacturing in nearly four years. Specifically, motor vehicle manufacturing and non-conventional oil and gas extraction—primarily at Alberta’s oil sands—recorded jumps in output as plants in both industries ramped back up to normal capacity following shutdowns in the months prior. Meanwhile, services-producing industries also notched a healthy expansion, led by gains in the real estate sector as resale activity increased in Ontario and Alberta. Retail and wholesale trade, for its part, continued growing in November as promotional events, including Black Friday sales, and new product releases spurred activity in the sector.
On an annual basis, GDP growth ticked up from 3.4% in October to 3.5% in November. Meanwhile, annual average GDP growth climbed to 3.3% from 3.1% a month earlier, marking the strongest reading in nearly six years.
Commenting on November’s outturn, Brian DePratto, Senior Economist at TD Economics, noted:
“The Canadian economy fired on all cylinders in November: production resumptions led the way, but nearly all major sectors reported gains on the month, an encouraging sign. Just as one should 'look through' one-off shocks such as maintenance shutdowns, the pop in activity that occurs as production comes back online should also be discounted. That said, as shown by this month's breadth of growth, the underlying trend for the Canadian economy remains a positive one: economic growth of around 2.4% (annualized) looks likely for the fourth quarter of 2017, confirming the spate of positive economic indicators that have so far characterized the end of last year.”
Author: Christopher Thomas, Economist