| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | 0.1% | 0.1% | 0.1% |
| Year over Year | 2.8% | 3.1% |
Highlights
Canada GDP edged up 0.1 percent in November, as expected. Activity expanded by 2.8 percent year-over-year. Statistics Canada's flash estimate for December indicates growth was virtually flat over the month, which would put the fourth quarter growth rate at 0.4 percent.
In November, output expanded in 14 of 20 industrial sectors, led by services, while activity in goods-producing industries contracted 0.1 percent after decreasing 0.5 percent in October.
Output in manufacturing edged down 0.1 percent, as a 0.9 percent drop in non-durables outweighed a 0.6 percent increase in durables. Activity also declined 0.1 percent in agriculture, forestry, fishing and hunting, and fell 0.7 percent in construction. By contrast, utilities rose 0.7 percent, and mining, quarry and oil and gas extraction was up 0.2 percent after contracting 1.6 percent in October. Overall, energy was flat in November after contracting 1.4 percent in October, and industrial production was up 0.1 percent.
The 0.2 percent gain in services resulted from widespread gains in November. The removal of travel restrictions, in particular, benefitted transportation and warehousing, where activity was up 1.0 percent. Among other sectors to post gains, arts, entertainment and recreation was up 0.6 percent, finance and insurance recovered 0.5 percent, and wholesale trade increased 0.2 percent. The public sector was up 0.3 percent, boosted by high demand in health care services. On the downside, retail trade decreased 0.6 percent and accommodation and food services were down 1.4 percent.
In December, Statistics Canada's advance estimate points to growth stalling, as increases in retail, utilities, and public sectors were offset by declines in wholesale, finance and insurance, and mining, quarrying, and oil and gas extraction. Such a slowdown would confirm the Bank of Canada's outlook.
In its January Monetary Policy Report, the BoC confirmed its projection of a stalling growth through the middle of this year as rate hikes take their toll on economic activity beyond the housing sector. It sees GDP growth slowing to an annual pace of 1.3 percent in the fourth quarter and 0.5 percent in the first quarter of 2023. In its policy statement, the central bank already telegraphed it was pausing its rate hike cycle"while it assesses the impact of the cumulative interest rate increases." That is, provided the economy evolves as expected.
Today's data confirming the central bank's scenario and Econoday Consensus Divergence Index is now at minus 4, also indicative of an economic performance that is roughly in line with expectations, which should leave the BoC firmly in its pause mode.
In November, output expanded in 14 of 20 industrial sectors, led by services, while activity in goods-producing industries contracted 0.1 percent after decreasing 0.5 percent in October.
Output in manufacturing edged down 0.1 percent, as a 0.9 percent drop in non-durables outweighed a 0.6 percent increase in durables. Activity also declined 0.1 percent in agriculture, forestry, fishing and hunting, and fell 0.7 percent in construction. By contrast, utilities rose 0.7 percent, and mining, quarry and oil and gas extraction was up 0.2 percent after contracting 1.6 percent in October. Overall, energy was flat in November after contracting 1.4 percent in October, and industrial production was up 0.1 percent.
The 0.2 percent gain in services resulted from widespread gains in November. The removal of travel restrictions, in particular, benefitted transportation and warehousing, where activity was up 1.0 percent. Among other sectors to post gains, arts, entertainment and recreation was up 0.6 percent, finance and insurance recovered 0.5 percent, and wholesale trade increased 0.2 percent. The public sector was up 0.3 percent, boosted by high demand in health care services. On the downside, retail trade decreased 0.6 percent and accommodation and food services were down 1.4 percent.
In December, Statistics Canada's advance estimate points to growth stalling, as increases in retail, utilities, and public sectors were offset by declines in wholesale, finance and insurance, and mining, quarrying, and oil and gas extraction. Such a slowdown would confirm the Bank of Canada's outlook.
In its January Monetary Policy Report, the BoC confirmed its projection of a stalling growth through the middle of this year as rate hikes take their toll on economic activity beyond the housing sector. It sees GDP growth slowing to an annual pace of 1.3 percent in the fourth quarter and 0.5 percent in the first quarter of 2023. In its policy statement, the central bank already telegraphed it was pausing its rate hike cycle"while it assesses the impact of the cumulative interest rate increases." That is, provided the economy evolves as expected.
Today's data confirming the central bank's scenario and Econoday Consensus Divergence Index is now at minus 4, also indicative of an economic performance that is roughly in line with expectations, which should leave the BoC firmly in its pause mode.
Market Consensus Before Announcement
GDP for November is expected to edge 0.1 percent higher on the month to extend a run of marginal gains.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.
Description
Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
