Economy Grows 0.3 Percent in October, Reports Statistics Canada

OTTAWA — Statistics Canada has announced that the economy saw a growth of 0.3 percent in October. This growth was driven by strong performance in the mining, quarrying, and oil and gas extraction sector, following a previous increase of 0.2 percent in September.

The growth in October is partly attributed to the services-producing industries, which themselves grew by 0.1 percent. This marks the fifth consecutive month of growth for these industries.

In contrast, the goods-producing industries experienced a boost of 0.9 percent after four months of declines. The mining, quarrying, and oil and gas extraction sector specifically surged by 2.4 percent in October, with all three subsectors showing improvement. The largest contributor to this growth was the oil and gas extraction subsector, which increased by 3.1 percent.

Manufacturing also made a recovery, with a growth of 0.3 percent in October, following four months of decreases. This increase was largely driven by the production of non-durable goods.

Andrew Grantham, a senior economist at CIBC, described the gains in October as “a larger-than-expected stride forward.” He noted that the results were slightly above what many analysts had anticipated. However, early indicators for November point to a potential slowdown, suggesting that the economy may have stumbled in that month.

Preliminary estimates from Statistics Canada indicate that real GDP for November could drop by 0.1 percent, as declines in mining, quarrying, oil and gas extraction, transportation, warehousing, and finance and insurance sectors are expected. These decreases might be offset somewhat by gains in accommodation, food services, and real estate.

Grantham noted that despite the fluctuations in monthly growth, the GDP tracking for the fourth quarter appears to be slightly below the projections made by the Bank of Canada, as well as the economy's long-term potential. Given this outlook, it is likely that the central bank will implement a quarter-percentage-point cut to its key policy interest rate in its upcoming January meeting, rather than the half-point cuts seen in previous meetings.

Areas of the economy sensitive to interest rates, such as real estate and retail sales, have shown signs of improvement following recent rate reductions. Grantham pointed out that additional interest rate cuts may be necessary in the New Year to help mitigate the output gap.

The real estate and rental leasing sector rose 0.5 percent, continuing its upward trend for the sixth straight month and marking its largest growth since January. This increase coincided with a rise in national home sales, particularly influenced by higher activity in regions like Greater Toronto and Greater Vancouver.

In construction, a growth of 0.4 percent was observed in October, led by non-residential construction projects. Wholesale trade also saw positive trends, growing by 0.5 percent for the second month in a row, with building materials and supplies being significant contributors to this growth.

Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, expressed optimism for GDP growth in the fourth quarter, estimating it could approach 2 percent. He mentioned that if this positive momentum continues, it could affect the Bank of Canada's decision in January potentially slowing down the pace of rate adjustments. However, he also highlighted ongoing challenges such as tariffs, reduced immigration targets, and elevated uncertainty affecting businesses, but it is still encouraging to see a solid GDP report for the end of the year.

This economic update was initially reported on December 23, 2024.

economy, growth, GDP