| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | 0.1% | 0.2% | 0.0% |
| Year over Year | 1.1% | 0.9% |
Highlights
Marking a first increase since May 2023, Canada's economic activity recovered 0.2 percent in November, slightly more than the consensus expectation of a 0.1 percent increase in an Econoday survey. The advance estimate for December points to a further 0.3 percent increase that would put the fourth quarter at 0.3 percent and the 2023 growth rate at 1.5 percent.
The Bank of Canada projected economic activity to stall in the fourth quarter, for 1.0 percent growth in 2023 as a whole, down from 3.8 percent in 2022. The central bank expects real GDP to expand at an annualized pace of 0.5 percent in the first quarter of this year.
In November, 13 of 20 industrial sectors increased, with the monthly recovery led by a 0.6 percent gain in goods-producing industries, which matched January 2023 growth rate but which had not been surpassed since June 2022, when the monthly growth rate was 0.7 percent. Except for a 0.2 percent gain in September, activity in goods-producing industries had been contracting every month since April 2023.
Manufacturing was up 0.9 percent in November, with non-durables up 1.2 percent, twice as much as durables. Utilities expanded 1.4 percent, agriculture, forestry, fishing and hunting 2.4 percent, and mining, quarrying, and oil and gas extraction 0.3 percent. Overall, energy increased 1.4 percent on the month. Construction was the only sector to see its activity contract in November, by 0.2 percent. Industrial production recovered 0.8 percent in November after retreating 0.3 percent in October and stalling in September. Advance indicators point to a further advance in manufacturing and mining, quarrying and oil and gas extraction, while construction further contracted in December.
Services edged up 0.1 percent in November, the same as in October. While the monthly pace was muted relative to goods-producing industries, it occurred against the backdrop of strikes that started in the Quebec public sector. A 0.7 percent gain in wholesale trade supported services in November and transportation and warehousing rebounded 0.8 percent. On the downside, a 0.3 percent drop in educational activities weighed on public sector growth, which was flat on the month amid strikes in Quebec. Elsewhere, retail trade contracted 0.1 percent after rising 0.9 percent in October. Advance indicators suggest that transportation and warehousing, as well as educational services declined in December, while real estate and rental and leasing increased further after edging up 0.1 percent in November.
While the Bank of Canada has been on hold, today's stronger-than-expected showing is more likely to keep the bias on the tightening side than not. In its January Monetary Policy Report, the BoC said it remained"particularly concerned about the upside risks." That being said, Econoday's Relative Performance Index, at a slight plus 4 and near the zero line, remains consistent with stable monetary policy.
The Bank of Canada projected economic activity to stall in the fourth quarter, for 1.0 percent growth in 2023 as a whole, down from 3.8 percent in 2022. The central bank expects real GDP to expand at an annualized pace of 0.5 percent in the first quarter of this year.
In November, 13 of 20 industrial sectors increased, with the monthly recovery led by a 0.6 percent gain in goods-producing industries, which matched January 2023 growth rate but which had not been surpassed since June 2022, when the monthly growth rate was 0.7 percent. Except for a 0.2 percent gain in September, activity in goods-producing industries had been contracting every month since April 2023.
Manufacturing was up 0.9 percent in November, with non-durables up 1.2 percent, twice as much as durables. Utilities expanded 1.4 percent, agriculture, forestry, fishing and hunting 2.4 percent, and mining, quarrying, and oil and gas extraction 0.3 percent. Overall, energy increased 1.4 percent on the month. Construction was the only sector to see its activity contract in November, by 0.2 percent. Industrial production recovered 0.8 percent in November after retreating 0.3 percent in October and stalling in September. Advance indicators point to a further advance in manufacturing and mining, quarrying and oil and gas extraction, while construction further contracted in December.
Services edged up 0.1 percent in November, the same as in October. While the monthly pace was muted relative to goods-producing industries, it occurred against the backdrop of strikes that started in the Quebec public sector. A 0.7 percent gain in wholesale trade supported services in November and transportation and warehousing rebounded 0.8 percent. On the downside, a 0.3 percent drop in educational activities weighed on public sector growth, which was flat on the month amid strikes in Quebec. Elsewhere, retail trade contracted 0.1 percent after rising 0.9 percent in October. Advance indicators suggest that transportation and warehousing, as well as educational services declined in December, while real estate and rental and leasing increased further after edging up 0.1 percent in November.
While the Bank of Canada has been on hold, today's stronger-than-expected showing is more likely to keep the bias on the tightening side than not. In its January Monetary Policy Report, the BoC said it remained"particularly concerned about the upside risks." That being said, Econoday's Relative Performance Index, at a slight plus 4 and near the zero line, remains consistent with stable monetary policy.
Market Consensus Before Announcement
After no change in both October and September, GDP in November is expected to rise 0.1 percent.
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.
