Activity in Canada was flat in October for a second consecutive month, a weaker performance than expected resulting in a 0.9 percent 12-month GDP gain, which was still up from 0.7 percent the previous month. November is unlikely to bring much momentum as the advance estimate points to a 0.1 percent monthly increase.

Growth in goods-producing industries stalled after rising 0.3 percent in September, which itself broke a streak of five monthly declines. Services edged up 0.1 percent. Manufacturing led the contraction as activity fell 0.6 percent, reversing September's advance of the same magnitude. Manufacturing was down in June, July and August, but could recover in November based on Statistics Canada's comments on the advance estimate. Construction was the other category to contract in October, by 0.1 percent after expanding 0.9 percent the previous month. Utilities were flat, while mining, quarrying, and oil and gas extraction increased 1.0 percent, nearly erasing September's 1.1 percent drop. Agriculture, forestry, fishing and hunting was up 1.1 percent, with advance estimates pointing to further advance in November.

Activity in services picked up 0.1 percent in October and has been hovering between flat and 0.1 percent since July after edging down 0.1 percent in June. Retail trade rose 1.2 percent after edging up 0.1 percent in September, and advance estimates point to a decrease in November. Statistics Canada's advance indicator for retail sales points to a flat showing in November based on responses from 54.5 percent of companies surveyed. Employment data show that nearly 27,000 jobs were shed in the wholesale and retail trade sector in November. On the downside, wholesale trade activity contracted 0.7 percent in October after declining 0.4 percent in September. Real estate, and rental and leasing was down 0.2 percent. Transportation and warehousing also contracted 0.2 percent, but could recover in November based on Statistics Canada's comments on advance estimates.

The Bank of Canada said in its December 20 minutes that"Members agreed that the likelihood that monetary policy was sufficiently restrictive to achieve the inflation target had increased". Today's data should only reinforce this view. The central bank projects real GDP to grow at an annualized pace of 0.8 percent in the fourth quarter.

After no change in August and a marginal 0.1 percent rise in September, GDP in October is expected to rise 0.2 percent.

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.

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.