| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | -0.3% | -0.4% to 0.0% | -0.3% | 0.2% |
| Year over Year | 0.4% | 1.0% |
Highlights
As expected, Canada's GDP contracted 0.3 percent in October after expanding 0.2 percent in September. November is likely to bring little relief given the advance estimate pointing to a 0.1 percent monthly increase.
Both goods-producing industries and services saw weaker activity in October, with respective GDP decreases of 0.7 percent and 0.2 percent.
The report fits into the Bank of Canada's projection of ongoing weakness in activity in the fourth quarter, making it unlikely for the central bank to change the status quo.
The manufacturing sector led the decrease with a 1.5 percent drop partly offsetting September's 1.8 percent rebound. Durable manufacturing fell 2.3 percent and non-durable was down 0.4 percent. Machinery manufacturing contributed the most to the decline. Wood product manufacturing was also down 7.3 percent, the largest drop since April 2020 amid production slowdowns following the announcement of additional U.S. tariffs on Canadian lumber starting October 14.
Activity in other major goods-producing industries also deteriorated on the month, although utilies were flat. Construction was down 0.4 percent, but is set to rebound in November based on advance estimates. Mining, quarrying, and oil and gas extraction declined 0.6 percent on the month after rising 0.3 percent, with the decline likely to continue in November, as is the case for manufacturing. Energy decreased 0.7 percent in October, more than erasing the previous month's rebound of 0.4 percent. Overall industrial production declined 0.9 percent in October.
In services, the public sector contracted 0.3 percent after edging up 0.1 percent in September, as a teachers's strike in Alberta weighed on educational services, which were down 1.8 percent, the largest decline since November-December 2023, when a public sector strike in Quebec dragged activity. Advance estimates point to a rebound in educational services in November.
Transportation and warehousing contracted 1.1 percent, erasing October's 1.0 percent advance amid ongoing postal service workers' strike. But activity is set to increase in November. Both wholesale trade and retail trade were also down in October, by 0.9 percent and 0.6 percent, respectively.
By contrast, finance and insurance increased another 0.4 percent in a fifth consecutive monthly gain, reaching a record high level. The increase was driven by equity and debt market activity.
Both goods-producing industries and services saw weaker activity in October, with respective GDP decreases of 0.7 percent and 0.2 percent.
The report fits into the Bank of Canada's projection of ongoing weakness in activity in the fourth quarter, making it unlikely for the central bank to change the status quo.
The manufacturing sector led the decrease with a 1.5 percent drop partly offsetting September's 1.8 percent rebound. Durable manufacturing fell 2.3 percent and non-durable was down 0.4 percent. Machinery manufacturing contributed the most to the decline. Wood product manufacturing was also down 7.3 percent, the largest drop since April 2020 amid production slowdowns following the announcement of additional U.S. tariffs on Canadian lumber starting October 14.
Activity in other major goods-producing industries also deteriorated on the month, although utilies were flat. Construction was down 0.4 percent, but is set to rebound in November based on advance estimates. Mining, quarrying, and oil and gas extraction declined 0.6 percent on the month after rising 0.3 percent, with the decline likely to continue in November, as is the case for manufacturing. Energy decreased 0.7 percent in October, more than erasing the previous month's rebound of 0.4 percent. Overall industrial production declined 0.9 percent in October.
In services, the public sector contracted 0.3 percent after edging up 0.1 percent in September, as a teachers's strike in Alberta weighed on educational services, which were down 1.8 percent, the largest decline since November-December 2023, when a public sector strike in Quebec dragged activity. Advance estimates point to a rebound in educational services in November.
Transportation and warehousing contracted 1.1 percent, erasing October's 1.0 percent advance amid ongoing postal service workers' strike. But activity is set to increase in November. Both wholesale trade and retail trade were also down in October, by 0.9 percent and 0.6 percent, respectively.
By contrast, finance and insurance increased another 0.4 percent in a fifth consecutive monthly gain, reaching a record high level. The increase was driven by equity and debt market activity.
Market Consensus Before Announcement
The consensus agrees with the Stats Canada estimate calling for a decrease of 0.3 percent in October after an increase of 0.2 percent in September.
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.
