Canadian Monthly GDP (November 2023)

Marc Ercolao, Economist

Date Published: January 31, 2023

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Canada's economy beat expectations in November, strong growth expected for December

  • The Canadian economy bucked the trend of flat growth over the past several months, growing by 0.2% on a month-on-month (m/m) basis in November. This print comes in above Statistics Canada's advanced guidance and market expectations for a 0.1% m/m gain. The flash estimate for December points to a healthy advance of 0.3% m/m.
  • November's reading was broad-based, with output expanding in 13 of 20 industries. The gain was led by goods-producing industries (+0.6% m/m), while the services side eked out a 0.1% m/m gain.
  • On the goods side, gains in both non-durable (+1.2% m/m) and durable goods manufacturing (+0.6% m/m) helped the sector chalk up the biggest contribution to the monthly GDP gain. Growth in mining, quarrying, and oil & gas (+0.3% m/m) and agriculture (2.4% m/m) provided an assist to November's growth.
  • On the services side, a rebound in wholesale trade (+0.7% m/m), led by motor vehicles (+2.6% m/m), did most of the heavy lifting. Transportation and warehousing also grew by a healthy +0.8% m/m. Services gains were offset by a 0.3% m/m slip in educational services as a result of the Quebec strikes, retail trade (-0.1% m/m) and finance and insurance (-0.2% m/m).
  • The advanced reading of 0.3% m/m growth in December was driven by increases in manufacturing, real estate, and oil & gas. December's education services and construction were cited as headwinds. 

Key Implications

  • November's GDP print surprised against expectations that the economy would advance at a more modest 0.1% m/m pace. With today's print and guidance for a December GDP rebound, fourth-quarter GDP is tracking just over 1% quarter-on-quarter annualized. This is roughly in line with our own expectations and materially above that of the Bank of Canada's (BoC) newly revised projection of no growth.
  • The Canadian economy looks to be finishing the year on a stronger note than most expected. Markets are still focused on the timing of rate cuts, but a heating up of the Canadian economy may push expectations for a first cut further down the line. Markets are leaning towards a rate cut by the spring, when it is expected that trends in both growth and inflation will be in the Bank's comfort zone. While the BoC remains in a holding pattern as it awaits confirmation that inflation will decisively settle at their 2% inflation target, strong data prints like today's GDP release will be keeping the Bank on their toes.