Canadian Monthly GDP (October 2021)

Omar Abdelrahman, Economist | 416-734-2763

Date Published: December 23, 2021

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Canada's economy advances solidly in October

  • The Canadian economy expanded by 0.8% (month/month) in October, matching Statistics Canada's flash estimate and consensus expectations for growth during the month. The release left Canada's real GDP 0.4% below its pre-pandemic (February 2020) levels in October.
  • Today's report also included Statistics Canada's flash estimate for November's performance, showing a projected 0.3% increase in real GDP during the month.
  • October's solid increase in activity was broad-based, with output expanding in 17 of the 20 industries. The goods-producing industries led the way (+1.6%), as the manufacturing sector saw a decent increase (+1.8%). Growth was broad-based across most sub-sectors, but largely driven by rebounding auto production (transportation equipment manufacturing was up 9.3% on the month following a 7.5% decline in September). October was also a healthy month for construction activity (+1.6%), which also saw broad-based increases across the residential (+2%), non-residential (+1.3%), repair (+1.9%), and engineering (+1.2%) sub-sectors. Meanwhile, strong global demand and a continued increase in oilsands and non-energy commodity production provided a boost to the mining, quarrying, and oil and gas extraction industry (+1.5%). 
  • The service-producing industries (+0.6%) also saw a decent performance in October. Strong activity in the resale housing markets lifted output in the real estate and rental and leasing sector (+0.8%). Moreover, with restrictions on activity and capacity having been eased in the autumn months, some of the close-contact service-producing industries also saw solid performances, including the retail trade (+1%), and the arts, entertainment, and recreation (+7.1%) sectors.          

Key Implications

  • October was an unambiguously strong month for Canada's economy, with broad-based increases recorded across most industries. Activity in the goods-producing industries was propelled by rebounding auto production and strong commodity demand. Meanwhile, continued strength in resale housing markets and a relaxation of restrictions in the autumn supported growth in service-producing industries. Together with November's flash estimate (+0.3%), today's release shows a strong start to the fourth quarter. 
  • However, the good news ends there, and the coming months may prove choppy. With new restrictions recently announced across some provinces in response to rising caseloads, Canada's economy will be susceptible to downside risks during the winter months. The hard-hit service-producing industries will, once again, feel the brunt of the impacts. Additionally, a potential switch to goods spending could exacerbate already elevated supply chain pressures.