Canada: Economy slips into contraction in October
GDP reading: GDP was down 0.3% on a seasonally adjusted month-on-month basis in October, following 0.2% growth in the previous month. October’s reading was the weakest since April 2021.
Drivers: Manufacturing output declined by 1.5% in October, effectively reversing the gains recorded in September, as weakness across both durable and non-durable goods industries exerted a significant drag on activity. Output in services-producing industries edged down 0.2%, reflecting the impact of several labour disruptions that constrained overall performance. Meanwhile, activity in mining, quarrying, and oil and gas extraction fell by 0.6% during the month, more than erasing the prior month’s increase.
GDP outlook: Preliminary estimates suggest that real GDP rose marginally by 0.1% in November. Gains in educational services, construction, and transportation and warehousing were partly counterbalanced by declines in manufacturing as well as in mining, quarrying, and oil and gas extraction.
Panelist insight: On the data and outlook, TD Economics’ Marc Ercolao said:
“After an upside surprise to growth in the third quarter, [the latest] GDP data together with November guidance indicate that fourth-quarter GDP growth is tracking roughly flat. Tariff-impacted industries showed some strain in October after gradually recovering in prior months. The expectation is that overall economic growth will remain subdued over the next quarter or two before gradually recovering over the medium-term.”