Canada: GDP regains momentum in November
January 31, 2011
In November, GDP expanded 0.4% over the previous month in seasonally adjusted terms. The increase followed on a 0.2% expansion in October and was above market expectations of a 0.3% increase. On an annual basis, GDP grew 3.2%, down from a 3.4% increase in October (previously reported: +3.3% year-on-year). As a result of the monthly acceleration, the trend continued to improve, with annual average growth stepping up from 2.6% in October to 3.0% in November. The monthly expansion was broad-based, as output increased in 15 of the 18 categories surveyed by Statistics Canada (Statcan). Oil and gas extraction led the way in November, followed by wholesale and retail trade. Finance, insurance and real estate services, which account for more than 20% of GDP, also expanded in November. In contrast, manufacturing contracted, mainly reflecting temporary plant shutdowns for retooling in the motor vehicle assembly industry and shift reductions in the motor vehicle parts industry. The November reading marked the fastest pace in eight months. Going forward, tax cuts in the U.S. should boost Canadian exports and provide a lift to GDP growth. The Central Bank expects the economy to grow at a seasonally adjusted annualized rate of 2.3% in the fourth quarter, which is in line with the Consensus Forecast. For the full year 2010, Canadian monetary authorities see the economy growing 2.9%. For 2011 and 2012, Central Bank projects GDP growth of 2.4% and 2.8% respectively.