Oil and Gas manufacturing. Credit: Unsplash/ Patrick Hendry1
Ottawa/CMEDIA: Statistics Canada reportedly says that Canada’s economy grew 0.3 percent in Oct, helped by strength in the mining, quarrying, and oil and gas extraction sector, following a 0.2 percent increase in Sep.
Marking the fifth straight month of increases, the agency says, the growth came as services-producing industries grew 0.1 percent for the month.
Meanwhile, after four consecutive monthly declines, goods-producing industries rose 0.9 percent.
With all three subsectors rising, mining, quarrying, and oil and gas extraction rose 2.4 percent in October with oil and gas extraction as the largest contributor, increasing 3.1 percent.
Driven by an increase in non-durable goods manufacturing, manufacturing rose 0.3 percent in the month, following four consecutive monthly declines.
It was suggested by Statistics Canada’s early estimate for November that due to decreases in mining, quarrying, and oil and gas extraction, transportation and warehousing, real GDP for the month edged 0.1 percent lower.
Increases in accommodation and food services and real estate and rental and leasing partially offset finance and insurance
Because of that the central bank reportedly will likely cut its key policy interest rate by a quarter-percentage point at its next meeting in Jan, rather than the half-percentage-point cuts it has made in its last two decisions.
Bank of Canada governor Tiff Macklem reportedly said policymakers would like to see growth pick up after they made two consecutive cuts of 50 basis points to the central bank’s policy rate in Oct and Dec, bringing the rate down to 3.25 per cent, the top of its neutral range.
Signalling a more “gradual approach” to monetary policy in the new year, Macklem said that real estate and rental and leasing increased 0.5 per cent, recording its sixth straight monthly increase and the largest since January.
This was due to the increase in national home sales in the month, partly driven by higher activity in markets such as the Greater Toronto and Greater Vancouver areas.
The industry saw the most monthly activity since April 2022.
Meanwhile, driven by non-residential building construction, the construction sector grew 0.4 percent in October.
For a second consecutive month the wholesale trade was up with 0.5 percent growth.
One of the most significant contributors to the sector’s growth are building material and supplies driven by an increase in lumber, plywood and millwork merchant wholesalers.
GDP growth in the fourth quarter of close to two percent is expected, Canadian Chamber of Commerce senior economist Andrew DiCapua said.
“If this momentum holds, it could influence the Bank of Canada’s January decision — possibly slowing the pace of rate cuts in the new year,” he said in a statement.
“That said, we remain pessimistic about the challenges ahead, with tariffs, reduced immigration targets, and increased uncertainty clouding the outlook for businesses. Still, it’s encouraging to see the economy posting a final GDP data point for the year on solid ground.”
“While there is evidence that interest rate-sensitive areas of the economy (i.e., real estate, retail sales) have already strengthened as the Bank of Canada has lowered rates, further interest rate relief will be needed in the new year to help close the output gap. We continue to see rates needing to dip slightly below neutral, forecasting a low of 2.25 per cent for the overnight rate in 2025,” said Andrew Grantham, a senior economist at Canadian Imperial Bank of Commerce.
