By Robb M. Stewart
OTTAWA--Canada's economy closed out last year on a surprisingly strong note thanks to increased activity by manufacturers and other goods-producing industries.
Gross domestic product, a broad measure of goods and services produced across the economy, increased 0.2% in November from the month before to 2.212 trillion Canadian dollars, the equivalent of $1.651 trillion, the government statistics agency said Wednesday. Compared with a year earlier, GDP by industry advanced 1.1%.
Based on advance information, Statistics Canada estimated growth was even stronger last month with a 0.3% rise in GDP. If that remains unchanged when official data are released at the end of next month, it indicates the economy at the industry level expanded 1.2% on an annualized basis in the final quarter of last year, rebounding from a modest contraction the quarter before and likely topping the central bank's forecast.
November marked the first monthly growth in Canada's economy since May and was stronger than the 0.1% rise in GDP expected by economists. The pickup was driven by the strongest growth by the country's goods producers since the start of 2023, outpacing a slight increase by services-producing industries that came despite public-sector strikes in the province of Quebec that kicked off that month.
The data agency's flash estimate for December indicates continued gains in manufacturing, as well as increases in real estate and rental and leasing, and mining, quarrying and oil and gas extraction, but declines in transportation and warehousing, construction and educational services.
For 2023 as a whole, the economy looks to have expanded 1.5% based on GDP by industry.
The Bank of Canada has projected GDP using expenditure-based accounts, which also adds in items such as inventory, was flat on an annualized basis in the fourth quarter of last year following a contraction of 1.1% in the third quarter.
Activity had been flat to modestly weaker through October, in part as the country faced a number of headwinds including wildfires that dented output by mining and energy companies, and strikes on key trade routes that squeezed supplies.
The central bank, which last week held its benchmark interest rate steady at 5% for a fourth straight policy meeting, has forecast economic growth will remain close to zero through the first quarter of this year as consumers pull back their spending in response to higher prices and rates and business investment contracts.
The labor market has loosened and the jobless rate has ticked higher in recent months despite strong population growth, though wage growth continues to outpace inflation. Despite the subdued economy, the Bank of Canada expects inflation will stay around 3% through the first half of 2024 and only return to its 2% target in 2025.
For November, Statistics Canada's data showed non-durable goods manufacturing increased 1.2%, the biggest monthly gain since May, due in part to the chemicals sector as a number of petrochemical plants continued to ramp up production following maintenance shutdowns. Durable-goods manufacturing also increased, partially offsetting a decline in October.
Wholesale trade rebounded in November from decline the two previous months, while transportation and warehousing expanded for the month with a recovery from strikes on the St. Lawrence seaway. The oil and gas industry helped drive a second straight monthly increase for mining, quarrying and energy extraction.
Still, Canadian educational services saw the first decline in November since June, limiting growth by the public sector with strikes by Quebec teachers and some health care workers.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
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