Statistics Canada Reports 0.3% GDP Growth in October

OTTAWA — According to Statistics Canada, the economy experienced a growth of 0.3% in October, primarily driven by robust performance in the mining, quarrying, and oil and gas extraction sector, following a 0.2% rise in September.

The report indicates that service-producing industries saw a growth of 0.1% for the month, marking the fifth consecutive month of increases in this sector.

In contrast, goods-producing industries, which had experienced four monthly declines, bounced back with a growth of 0.9% in October.

Specifically, mining, quarrying, and oil and gas extraction surged by 2.4%, with all three subsectors showing improvement. Notably, oil and gas extraction contributed the most, increasing by 3.1%.

Manufacturing also saw a positive trend, growing 0.3% for the month after four months of decline, largely thanks to an increase in the manufacturing of non-durable goods.

Andrew Grantham, a senior economist at CIBC, described the growth in October as “a larger-than-expected stride forward,” as it slightly surpassed consensus estimates. However, he cautioned that initial indicators for November suggest the economy may have faced setbacks again.

Statistics Canada's preliminary estimate for November indicates a slight decline of 0.1% in real GDP, with decreases in mining, quarrying, oil and gas extraction, transportation and warehousing, as well as finance and insurance sectors. This decrease was, however, partially offset by gains in accommodation and food services, along with real estate and rental and leasing services.

Despite the volatility observed month to month, Grantham noted that the Q4 GDP is still projected to be slightly below the Bank of Canada's forecast and the economy's long-term potential. He anticipates that the central bank will likely reduce its key policy interest rate by a quarter percentage point in its upcoming January meeting, differing from the recent half-percentage-point cuts.

Grantham added that there are signs that interest-rate sensitive sectors of the economy, like real estate and retail sales, have been improving as the Bank of Canada has reduced rates. He emphasized that further interest rate relief will be necessary in the New Year to help narrow the output gap.

Additionally, real estate and rental and leasing sector rose by 0.5%, marking its sixth consecutive monthly increase, with the most significant rise since January. This increase was fueled by a rise in national home sales, particularly in active markets like Greater Toronto and Greater Vancouver.

The construction sector also witnessed growth, climbing 0.4% in October, mainly driven by non-residential building construction.

Wholesale trade continued its upward trend with a 0.5% growth for the second consecutive month, with building materials and supplies contributing significantly to this sector's rise, especially in lumber, plywood, and millwork wholesaling.

Andrew DiCapua, a senior economist from the Canadian Chamber of Commerce, expressed an optimistic outlook for GDP growth, estimating it could approach two percent for the fourth quarter. He mentioned that if this momentum continues, it might influence the Bank of Canada's decision in January and potentially slow the pace of interest rate cuts in the new year.

However, he remains cautious about potential challenges ahead, including tariffs, reduced immigration targets, and rising uncertainties affecting the business outlook. Still, he reflected that it is reassuring to see the economy ending the year on a strong note in terms of its GDP performance.

This report was first published on December 23, 2024.

GDP, Canada, Economy