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Canada’s GDP stagnant after four monthly increases
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Julian Beltrame
The Canadian Press
OTTAWA — The Canadian economy showed signs of braking in October, starting off what many expect will be a weak last quarter of the year following the previous period’s rebound.
Real gross domestic product came in flat during the month, even below the extremely modest 0.1 per cent consensus expectation of economists.
“A not so cheerful start to the holiday season,” said CIBC World Markets economist Peter Buchanan.
Manufacturing was up, as was the retail sector but weak activity in utilities, construction, mining and oil and gas, and wholesale trade wiped out the gains.
Scotiabank’s Derek Holt said the result suggests that fourth-quarter growth, which includes still unpublished data from November and December, is tracking at a soft 1.4 per cent annualized. That’s better than the Bank of Canada’s official call, but would constitute a disappointment from the upward surprise an increasing number of analysts had been wishing for.
Third-quarter growth came in at a much stronger than expected 3.3 per cent, but the October figures suggest output is falling back to the recent trend of very weak expansion.
Union economist Erin Weir said the “Christmas goose egg” should serve as a warning to the federal government, particularly as October and November saw declines in employment. The economy shed 54,000 jobs in October and an additional 19,000 in November.
“The prime minister recently stated that deficit reduction will be his top priority in the New Year. Instead of cutbacks, the top economic priority should be to support growth and create jobs through renewed public investment,” he said.
In a comprehensive analysis of Canada’s economy, the International Monetary Fund on Thursday said the government should be “flexible” in its approach and be prepared to step in with stimulus if conditions dramatically worsen. It did not calculate the likelihood of such an outcome, but the caution suggests the IMF believes the danger is more than theoretical.
October’s performance ends four consecutive months of expansion for the Canadian economy, Statistics Canada noted.
Overall, goods-producing industries fell 0.2 per cent due to declines in utilities, construction, mining and oil-and-gas extraction. Manufacturing rose a healthy 0.3 per cent, however.
Services increased 0.2 per cent, led by retail trade and, to a lesser extent, finance and insurance, the public sector and professional services.
Wholesale trade and some tourism-related industries fell.
The utilities sector decreased 1.5 per cent in October, mining and oil-and-gas extraction declined 0.2, construction decreased 0.4, wholesale trade fell 0.3.
Existing-homes sales increased across the country, while manufacturing production rose 0.3 per cent, retail trade was up 0.6 and the finance and insurance sector rose 0.3.
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