Canada: GDP advanced 0.2% in October

December 23rd, 2010 | by linda smit |

Latest: +0.2% (actual) +0.3% (expected)

Previous: -0.1% (no revision)

FACTS: Real GDP increased 0.2% in October, following a decline of 0.1% in September. Activity was up in the goods producing sector (+0.2%) after decreasing (-0.7%) in the previous month. Mining & oil & gas extraction activity surged (+2.4%), this sector being alone in positive territory among goodsproducing industries, while utilities (-1.5%) and manufacturing (-0.6%) lagged. Industrial production jumped 0.4% this month. Production in non-durable manufactured goods tumbled 2.3% while durable manufacturing industries advanced 0.8%. Energy production was up 1.1% in the month, following a 1.7% decrease in September. Service sector activity was up 0.2% with wholesale trade (+0.5%) and transportation & warehousing (+0.5%) posting the largest increase. Retail trade (-0.4%), information & cultural industries (- 0.2%) and accommodation & food services (-0.2%) posted the largest pullback.

OPINION: In October, the Canadian economy was back in positive growth territory with both goods and services producing industries increasing 0.2%, following a decline in September. Still, on a year-todate basis, services are displaying a lack of momentum, while goods excluding mining and O&Gseems to be stalling in recent months. Fortunately, mining and O&G extraction industry has surged in the last months. Without this industry contribution in October, growth would have been negative again this month in Canada. With one month of data in the fourth quarter, annualized GDP growth is running at a rate of .7%. In this context, we continue to expect a second consecutive slow growth quarter in Canada (less than 1.5%). However, the picture should improve in coming quarters in Canada, considering commodity prices should remain buoyant and, in 2011, U.S. domestic demand should rise in excess of 3.0% for the first time in four years.

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