Canadian Monthly GDP (November 2024)

Canada's economy pulls back in November, but a December lift is in the cards 

• Canadian economic growth took a step back in November, falling 0.2% month-on-month (m/m). This was a tick below Statistics Canada's advanced guidance and consensus expectations. Early estimates from Statistics Canada point to a 0.2% m/m rebound for December GDP growth, due in part to increases in retail trade, manufacturing, and construction activity.
• November's reading was broad-based, with output contracting in 13 of 20 industries. The goods sector fell by 0.6% m/m, while the services sector saw a more modest decline of -0.1% m/m.
• A 3.4% m/m decline in oil sands dragged down the mining/quarrying/oil & gas sector. Meanwhile, utilities fell by a hefty 3.6% m/m. The construction sector buffered some of the goods-side shortfall, expanding for a fourth consecutive month (0.7% m/m).
• On the services side, the Canada Post strike weighed on the transportation & warehousing sector (-1.3% m/m). Elsewhere, the finance & insurance sector slipped for a second consecutive month (-0.4% m/m). A decent lift in accommodation and food services (1.4% m/m) countered some of the services-sector downside.

Key Implications

• It's steady as she goes for domestic growth developments, as recent data comes in more or less in line with expectations. With November GDP data and December guidance, growth in the fourth quarter is tracking on point with the Bank of Canada's (BoC) most recent projections (1.8% q/q annualized). This would mark a decent acceleration from Q3's more meager gain of just 1% and provides a decent handoff into 2025, especially given looming uncertainties. 
• The BoC has its work cut out for them. After slashing interest rates this week, they will now wait for further details about Trump's tariff implementation plan, which will come as early as tomorrow. The Bank acknowledged that past interest rate cuts are starting to boost the economy while inflation is expected to be stable at 2%. However, future policy setting is subject to higher-than-usual uncertainties. While we think the Bank will step to the sidelines at their March meeting, expedited rate cuts may be in the cards should a worst-case trade war ensue.            

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