Statistics Canada Reports Economic Growth of 0.3% in October

OTTAWA — Statistics Canada has reported that the Canadian economy experienced a growth of 0.3 percent in October. This growth was primarily driven by strong performance in the mining, quarrying, and oil and gas extraction sectors, following an increase of 0.2 percent in September.

The growth in October was supported by a 0.1 percent increase in services-producing industries, marking the fifth consecutive month of growth in this sector. In contrast, goods-producing industries saw a rise of 0.9 percent after four months of decline.

Specifically, mining, quarrying, and oil and gas extraction rose by 2.4 percent in October, with contributions from all three subsectors. Oil and gas extraction alone increased by 3.1 percent, making it the largest contributor to the sector's growth.

In manufacturing, there was a 0.3 percent increase in October, ending a streak of four monthly declines. This rise was notably fueled by growth in non-durable goods manufacturing.

CIBC senior economist Andrew Grantham described the economic increase in October as "a larger-than-expected stride forward," acknowledging that the results surpassed consensus estimates. However, he cautioned that early indicators for November suggest the economy may have stumbled, with preliminary estimates showing a possible decline in real GDP by 0.1 percent for the month.

The anticipated decline in November could be attributed to downturns in mining, quarrying, oil and gas extraction, transportation and warehousing, and finance and insurance. These decreases may be partially balanced by growth in accommodation and food services and in real estate as well as rental and leasing.

Grantham pointed out that despite the monthly fluctuations, fourth-quarter GDP is tracking slightly below the projections set by the Bank of Canada (BoC) and underneath the economy's long-term potential. As a result, it is likely that the central bank will reduce its key policy interest rate by a quarter percentage point during its upcoming meeting in January, in contrast to the half-point cuts implemented in previous meetings.

He elaborated that while areas of the economy sensitive to interest rates, such as real estate and retail sales, have shown signs of strengthening as the BoC has lowered rates, further easing will be necessary in the New Year to address the output gap.

Real estate and rental and leasing services grew by 0.5 percent, marking the sixth consecutive month of growth and the most significant increase since January. This positive trend coincides with a rise in national home sales, particularly in markets like Greater Toronto and Greater Vancouver.

The construction sector also experienced growth with a 0.4 percent increase in October, notably driven by non-residential building projects.

Additionally, wholesale trade enjoyed a second straight month of growth, seeing an increase of 0.5 percent, with building materials and supplies contributing significantly to this rise, especially with an uptick in sales among lumber, plywood, and millwork merchants.

Canadian Chamber of Commerce senior economist Andrew DiCapua expressed his expectations for fourth-quarter GDP growth to be close to two percent. He noted that if this momentum continues, it may influence the Bank of Canada's decisions in January, potentially moderating the pace of interest rate cuts in the coming year. "That said, we remain cautious about the challenges that lie ahead due to tariffs, reduced immigration targets, and increasing uncertainty, which may hinder business prospects. Nevertheless, it is promising to see the economy finishing the year on solid ground," he remarked.

Growth, Economy, Canada