Canada’s economic system tops October progress forecast; contraction seen in November

OTTAWA (Reuters) – Canada’s economic system exceeded market expectations with 0.3% progress in October, led by will increase in oil and fuel extraction and manufacturing, however gross home product doubtless contracted in November, information confirmed on Monday.

Analysts polled by Reuters had forecast a 0.2% month-over-month rise in October. September’s progress price was upwardly revised to 0.2% from an preliminary report of 0.1%, Statistics Canada (Statscan) information confirmed.

The stronger than anticipated begin to the fourth quarter and the upward revision to September’s progress price may assuage some considerations about Canada’s economic system.

Progress within the third quarter missed the Financial institution of Canada’s (BoC) forecast and the central financial institution stated earlier this month that information recommended the economic system could underperform its expectation within the final three months of 2024.

In a preliminary estimate for November, Statscan stated GDP doubtless decreased by 0.1% as declines in sectors together with mining, quarrying, and oil and fuel extraction and transportation and warehousing have been partially offset by will increase in lodging and meals providers and actual property and rental and leasing.

If November’s forecast is confirmed and GDP stays unchanged in December, the economic system would fall wanting the BoC’s 2% progress projection for the fourth quarter.

Progress in October was pushed a rebound within the goods-producing trade, which rose 0.9% in October after shrinking for 4 consecutive months, Statistics Canada (Statscan) information confirmed. The services-producing industries edged up 0.1%.

Throughout the goods-producing trade, the mining, quarrying, and oil and fuel extraction sector expanded 2.4% after three straight months of declines, Statscan information confirmed.

Manufacturing rose 0.3% in October pushed by a rise in non-durable items manufacturing.

The central financial institution, partly to assist tackle slower progress, lowered its key coverage price by 50 foundation factors to three.25% earlier in December and indicated additional reductions could be extra gradual. The financial institution will launch contemporary forecasts together with its subsequent price choice on Jan. 29, earlier than Statscan’s subsequent GDP report.

The BoC has cumulatively slashed rates of interest by 175 bps since June as inflation returned to focus on, and cash markets see a roughly 50% likelihood of 25 bps reduce in January.