Jeremy Torobin – CTV News
Canada’s economy expanded for a third straight month in November, as mining, energy and wholesale trade helped pull the country further out of recession.
The 0.4% growth in the month, reported Friday by Statistics Canada, was more than economists expected. The federal statistics gathering agency also revised October’s growth figure up to 0.3%, from the initially reported 0.2%. September’s reading was also revised up a tenth of a percentage point.
November’s data indicates the economy – which grew just 0.4% in the third quarter – is on track to meet or exceed the Bank of Canada’s 3.3% growth estimate for the final three months of 2009, economists said.
“It’s certainly an indication that the economy picked up a lot of steam in the last quarter,” said Millan Mulraine, an economics strategist at TD Securities in Toronto. “We didn’t see it coming; we never thought it would be at this level so early.”
Even a flat reading for December would yield a pace approaching 4% annual growth for the October-through-December period, Mr. Mulraine and economists such as Doug Porter of BMO Nesbitt Burns said.
Mining, and oil and gas extraction and wholesale trade accounted for about 60% of economic growth in November, Statistics Canada said in its monthly report on Canada’s gross domestic product.
Construction rose for a fourth straight month, expanding 1.1% largely because of a 2.5% increase in the residential sector. The country’s hot home resale market led to a 0.7% increase in output from real estate agents and brokers, Statistics Canada said.
Also, “strong activity” in the bond market and a spike in sales of mutual funds pushed the finance and insurance sector up 1.2%.
Despite the gains, gross domestic product was down 1.7% in November from a year earlier, but that year-over-year gap was almost 3% the month before.
The central bank said in its Jan. 21 quarterly forecast that companies continue to have plenty of excess capacity and predicted the economy won’t be running at full tilt until the third quarter of 2011, in part because of the effect Canada’s strong currency is having on sales to the U.S. and overseas.
Canada’s beleaguered manufacturing industry stalled in November after an anemic 0.1-per-cent gain the previous month, retail trade fell 0.8% after at least five months of increases, and the utilities sector contracted by 1.8% as unseasonably warm weather reduced demand for electricity and natural gas heating.
Meanwhile, the U.S. economy grew a more-than-expected 5.7% in the last quarter of 2009, according to a preliminary estimate released Friday by the Commerce Department in Washington. Though the gain was largely attributed to factories replenishing inventories, should that number hold it would be the biggest quarterly annualized gain in six years.
That bodes well for Canadian growth going forward because it suggests demand for exports to the U.S. could pick up sooner than anticipated as America’s shell-shocked consumers recover further and spend more.
The Bank of Canada says the domestic economy will expand 2.9% this year, a slightly rosier prediction than the 2.6% forecast issued by the International Monetary Fund this week.
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