As the year comes to a close, Canada’s economy has shown signs of resilience and growth. In October, the economy expanded by 0.3%, building upon a 0.2% increase in September. The mining, quarrying, and oil and gas extraction sector played a significant role in this growth, with a notable 2.4% increase in October. Additionally, the services-producing industries saw a 0.1% growth, marking the fifth consecutive month of increases, while goods-producing industries experienced a 0.9% rise after four months of decline.
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Industry Growth:
- The mining, quarrying, and oil and gas extraction sector witnessed a notable 2.4% increase in October, with all three subsectors showing growth. Oil and gas extraction, in particular, saw a 3.1% increase.
- Manufacturing also saw positive growth in October, with a 0.3% increase driven by non-durable goods manufacturing.
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Economic Outlook:
- While October saw positive gains, early estimates for November suggest a 0.1% decrease in real GDP. This decrease was attributed to declines in mining, quarrying, and oil and gas extraction, transportation and warehousing, and finance and insurance.
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Banking Sector Response:
- CIBC senior economist, Andrew Grantham, highlighted that despite the positive strides in October, the economy’s performance in November indicates a potential need for further interest rate cuts in the New Year. In light of this, the central bank may opt for a quarter-percentage point cut at its next meeting in January.
- Sectoral Analysis:
- Real estate and rental and leasing saw a notable 0.5% increase in October, showcasing its sixth straight monthly increase. Strong home sales in markets like Greater Toronto and Greater Vancouver contributed significantly to this growth.
- The construction sector also experienced growth in October, driven by non-residential building construction.
- Wholesale trade also saw positive growth for the second consecutive month, with a 0.5% increase. Building material and supplies contributed significantly to this growth.
In conclusion, the Canadian economy is poised for modest growth in the fourth quarter, with an anticipated GDP growth of close to two per cent. Despite the challenges presented by tariffs, reduced immigration targets, and increased uncertainty, the economy is on solid ground. Moving forward, the momentum in various sectors could influence the Bank of Canada’s decision-making in January, potentially impacting the pace of future rate cuts. As we look towards the New Year, it is essential to continue monitoring economic indicators and adapting to the evolving landscape for sustained growth and prosperity.
