Canada’s GDP falls by 0.1 per cent in October: Statistics Canada

OTTAWA — Canada’s economy contracted slightly in October, with real gross domestic product down 0.1 per cent from September — the first month-to-month decline since February, Statistics Canada reported Monday.

Economists had projected a flat GDP report for October compared with September, according to financial markets data firm Refinitiv, despite a recent flurry of Statcan reports that indicated significant slowing in some sectors.

The slowing included the biggest month-to-month decline in retail sales since March 2016 as well as significant declines in wholesale sales and manufacturing.

“Markets and the Bank of Canada have been tempted to sound the ‘all clear’ signal … but a 0.1 per cent decline in October GDP puts the economy on a chilly path at the start of the fourth quarter,” CIBC chief economist Avery Shenfeld said in a note to clients.

“You have to go all the way back to June to find a monthly growth reading better than a plus-0.1 per cent, so coupled with the steep employment decline reported for November, there’s at least some doubts about the underlying trend late this year.”

Brian DePratto, senior economist for TD Economics, wrote that the Statistics Canada report on Monday sends his bank’s estimate for fourth quarter GDP growth significantly lower, to just 0.5 per cent annualized.

“If borne out, that pace of growth would, in an echo of the retail sales data, be the weakest in more than three years, and fall well short of the Bank of Canada’s 1.3 per cent tracking from their October Monetary Policy report.”

The Bank of Canada has kept its key interest rate on hold at 1.75 per cent since October 2018, despite rate reductions at other central banks including the U.S. Federal Reserve.

Its Dec. 4 rate decision, as well as subsequent comments from Bank of Canada officials, noted that the domestic economy seemed to be resilient but that the biggest risk was from trade conflicts weighing on global economic activity.

Jobs data surprised analysts on Dec. 6 when Statistics Canada announced the economy had lost 71,200 jobs in November, pushing up the national unemployment rate to 5.9 per cent — the highest since August 2018. The monthly jobs report is notoriously volatile, so economists caution not to put too much weight on one month’s results, but the disappointment for November followed a weak October showing.

The October GDP report says October had the biggest month-to-month decline in retail trade since March 2016 — falling 1.1 per cent, with 10 of 12 subsectors down.

There were also declines in wholesale trade (down 1.0 per cent) and manufacturing (down 1.4 per cent).

DePratto, in the TD Economics commentary, said that manufacturing represented the biggest drag on the economy.

“The biggest story there was spill-overs from a U.S. auto sector strike that sent transportation equipment manufacturing 2.5 per cent lower, but there were additional drags,” DePratto wrote.

“Eight of 10 subsectors reported lower output in October, including machinery manufacturing, fabricated metal products, and wood products, as well as rubber and plastics products.”

Those declines were only partly offset by an advance in the mining, quarrying and oil and gas extraction sector (up 0.1 per cent overall) as well as transportation and warehousing services (up 0.6 per cent).

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Anti-racism demonstration was not a ‘peaceful protest,’ as sides spar in Red Deer

Two groups that rallied in Red Deer on Sunday afternoon could only… Continue reading

Addressing anti-mask protests poses a challenge for leaders, experts say

Quebec’s COVID-19 case numbers hit their highest numbers since the end of May

Canada’s Kennedy to yesterday’s man: former PM John Turner dead at 91

Politicians and other public figures immediately began sharing memories

QUIZ: A celebration of apples

September is the start of the apple harvest

Five things to watch for in the Canadian business world in the coming week

The 2020 Global Business Forum in Banff, Alta., will be held as a special hybrid event

New tools, ideas needed to speed up housing strategy funding, CMHC president says

Slow turnaround time on some of its national housing strategy programs

Letter containing ricin sent to White House may have come from Canada: RCMP

The letter contained ricin, a toxic substance found naturally in castor beans

Nunavut reports first confirmed COVID-19 cases, saying both are mine workers

The territory says at this time, there is no evidence of transmission within site

B.C. migrant, undocumented workers rally for permanent residency program

The pandemic has shown how heavily Canada relies on migrant and undocumented workers

Wetaskiwin RCMP make arrests for Hit and Run to residence

Damage estimates are expected to be in excess of $20,000.

Former prime minister John Turner dead at 91

TORONTO — Former prime minister John Turner, whose odyssey from a “Liberal… Continue reading

Hay’s Daze: Happy to be left out of the picture

Talk about being out of the loop. Head in the sand. Uninformed,… Continue reading

Most Read