Ottawa/CMEDIA: Canada’s economy reportedly experienced more than expected largest monthly contraction of 0.2 percent in Nov since Dec 2023 contracts, Statistics Canada said Friday.
Led by a drop in output in mining, quarrying, oil sands extraction and transportation, among others, this shrink follows a 0.3 percent increase in Oct.
With 13 of 20 sectors contracting, there were broad-based declines in Nov.
Work stoppages across inland transportation and at ports were mainly responsible for shrinking of a majority of sectors.
While the services-producing industries contracted by 0.1 percent, transportation and warehousing led the drop with a contraction of 1.3 percent, its largest decline in two years.
This was led by work stoppages in postal services and labour actions at ports, StatsCan said.
Mining and quarrying and oil and gas extraction within the goods-producing industries dropped by 1.6 percent.
A drop by 0.1 percent of GDP in Nov was estimated by the analysts polled by Reuters, with a bounce-back in Dec was foreseen by the economists.
With the likelihood of GDP to rebound by 0.2 percent in Dec shown by a preliminary estimate, led by increases in retail trade, manufacturing and construction, the statistics agency said.
While the Dec figures will be announced next month, StatsCan will also publish the fourth-quarter economic growth number.
The annualized fourth quarter GDP is likely to be 1.8 percent, StatsCan initially estimated, similar to what the Bank of Canada had forecast in its latest projections published this week.
Despite several rounds of interest rate cuts including cut rates by a cumulative 200 basis points since June to three percent, the central bank has been concerned about the pick-up in Canada’s economic activity.
Although Bank of Canada governor Tiff Macklem said growth was picking up after its announcement of a 25-basis-point cut this week, it wanted it to be sustained, the bank said.
If the reading for the final three months of the year holds up when Statistics Canada releases its official figures on Feb. 28, it will be a pick up from an annual growth rate of one percent in the third quarter.
Benjamin Reitzes, managing director and Canadian rates and macro strategist at BMO, said the preliminary reading for the fourth quarter matched the Bank of Canada’s estimate.
Trump has signalled he’s ready to impose 25 per cent tariffs on Canadian goods as early as Saturday.
Led especially by a decline in population this year, the bank revised its 2025 GDP growth forecast downward from earlier 2.1 per cent to 1.8 percent
But according to the growth forecast, figures could further reduce, if U.S. President Donald Trump decides to slap 25 percent tariffs on all Canadian imports.
Labour disputes at the Port of Montreal and Port of Vancouver during the month were also pointed out by Statistics Canada to cause a dip in economy.
With Taylor Swift’s Eras Tour arriving in Toronto in Nov, the agency also noted a consequent growth of several leisure-related industries including accommodation and food, arts, entertainment and recreation and air transportation in Nov.
A 1.4 percent increase in the accommodation and food services sector increased in Nov, the largest rise since January 2023, while arts, entertainment and recreation grew 0.8 percent.
Air transportation increased in Nov by 1.3 percent.
