Statistics Canada Reports Economic Growth of 0.3% in October

OTTAWA — Statistics Canada has announced that the economy experienced a growth of 0.3 per cent in October. This growth was supported by strong performances in the mining, quarrying, and oil and gas extraction sectors, following a previous increase of 0.2 per cent in September.

The report indicated that services-producing industries saw a growth of 0.1 per cent for the month, marking the fifth consecutive month of growth in this area. In contrast, goods-producing industries rebounded with a 0.9 per cent increase after four months of decline.

Notably, the mining, quarrying, and oil and gas extraction sectors grew by 2.4 per cent, with all three subsectors reporting increases. The oil and gas extraction subsector was the largest contributor to this growth, recording a rise of 3.1 per cent.

Manufacturing also improved by 0.3 per cent in October, following a streak of declines. This growth was mainly driven by an upswing in non-durable goods manufacturing.

Andrew Grantham, a senior economist at CIBC, described the economic growth in October as “a larger-than-expected stride forward,” as the results exceeded consensus estimates. However, he cautioned that preliminary data for November indicates a possible setback, suggesting the economy may have faltered in that month.

Statistics Canada’s early estimate for November points to a decrease in real GDP of 0.1 per cent. This decline is attributed to reductions in mining, quarrying, and oil and gas extraction, as well as in the transportation and warehousing sectors, along with finance and insurance. These drops, however, were slightly counterbalanced by rises in accommodation and food services, and real estate and rental and leasing.

Grantham observed that despite monthly fluctuations, the GDP for the fourth quarter is tracking slightly below the Bank of Canada’s forecast and the economy's long-term potential. Consequently, he anticipates that the central bank will likely trim its key policy interest rate by a quarter percentage point during its next meeting in January, as opposed to the half-percentage-point cuts seen in its last two decisions.

“While there are signs that interest-rate sensitive areas of the economy, such as real estate and retail sales, have already begun to recover due to the Bank of Canada’s previous rate cuts, further reductions will be necessary in the New Year to better address the output gap,” Grantham added.

In real estate, the sector recorded a growth of 0.5 per cent, marking its sixth consecutive month of increases and the most substantial growth since January. This growth was fueled by a rise in national home sales, particularly in major markets like Greater Toronto and Greater Vancouver.

The construction industry grew by 0.4 per cent in October, largely due to non-residential building construction projects. Meanwhile, wholesale trade continued its upward trend for a second consecutive month, posting 0.5 per cent growth. This growth was notably driven by an increase in building materials and supplies, especially from lumber, plywood, and millwork merchant wholesalers.

Andrew DiCapua, a senior economist at the Canadian Chamber of Commerce, forecasts that the GDP growth for the fourth quarter could approach two per cent. He noted that if this trend continues, it may influence the Bank of Canada’s decisions in January, potentially leading to a more cautious approach to rate cuts in the new year. However, he expressed concern over ongoing challenges such as tariffs, lowered immigration targets, and greater uncertainty affecting business prospects. Nevertheless, he finds it reassuring that the economy has ended the year on a solid footing with this final GDP data point.

This report was first published on December 23, 2024.

economy, growth, Canada