Oil, gas extraction help boost Canada’s economy in November
OTTAWA: Canadian economic growth edged up in November on an increase in oil and gas extraction, as well as greater wholesale and retail trade but the modest improvement still pointed to a fourth quarter that was likely weak at best.
Gross domestic product rose 0.3 percent for the month, matching economists’ expectations, Statistics Canada said on Friday.
The growth for November comes on the heels of a flat October and a decline in September. While economists said November’s rebound was encouraging, it did not change expectations that growth likely stalled again in the final quarter of the year shortly after oil-exporting Canada emerged from a mild recession
Andrew Kelvin, senior rates strategist at TD Securities, said Friday’s figure likely puts quarterly growth around zero, which is what the Bank of Canada recently forecast.
For the Bank of Canada, “it doesn’t change anything there,” Kelvin said.
The central bank held rates earlier this month amid concern about the falling Canadian dollar. A recent poll showed most economists expect the bank to stand pat until 2017, but a minority anticipate another cut this year.
The Canadian dollar firmed against the greenback following the data but it was also boosted by an increase in oil prices and a slower US economy in the fourth quarter.
Oil and gas extraction jumped 2.1 percent in November, rebounding from a slump in September and little growth in October following production problems and maintenance shutdowns.
Retail trade rose 1.2 percent with gains seen in nearly all of the trade groups, including motor vehicle and parts dealers. The wholesale trade segment rose for the first time in five months, gaining 1.3 percent, helped by increased demand for building materials and supplies.
But some of the improvement in sectors including retail and oil and gas production were reliant on temporary gains, said Derek Holt, economist at Scotiabank, who sees the economy tracking at a 0.3 percent contraction in the fourth quarter.
Separate data showed producer prices slipped in December for the fifth month in a row, driven mainly by lower prices for energy and petroleum products.
Prices were down 0.2 percent, a touch shy of economists’ expectations for a decline of 0.3 percent. Since July, the index has lost 1.7 percent.
Lower prices for crude energy products also weighed on the raw materials price index, which tumbled 5.0 percent, steeper than the 4.0 percent decline that had been forecast.