Canada's GDP grows by 0.3% in November

Canada's economy resumed growing in November, expanding by 0.3 per cent from the month before, thanks mainly to increases in trade, manufacturing and oil and gas extraction.

The monthly growth follows no growth at all in October and a drop of 0.5 per cent in September, Statistics Canada reported Friday.

That growth figure matched the consensus expectation of economists, who noted that the gains were relatively broad-based, as goods-producing industries expanded by 0.4 per cent while service-producing industries rose by 0.2 per cent.

Wholesale and retail trade both grew, with wholesale trade surging by 1.3 per cent after contracting for four months in a row. 

Manufacturing output also grew, rising 0.4 per cent in November. Factory output had fallen in both September and October.

"The bounce higher in November GDP was encouraging, although it still did not fully offset the 0.5 per cent decline in September that was followed by flat activity in October," noted RBC assistant chief economist Paul Ferley.

"Because of this earlier weakness and despite the solid increase in November, fourth-quarter GDP is likely to remain unchanged in the quarter," he said.

Some economists were less than impressed by the return to growth.

"The underlying story remains an economy that is struggling to post sustainable growth — most vividly highlighted by the fact that GDP has risen a microscopic 0.2 per cent in the past 12 months combined," said BMO chief economist Douglas Porter in a morning commentary. 

Amid all the gloom in the energy sector, this morning's GDP report said oil and gas extraction grew by 2.1 per cent in November. Non-conventional oil production rose 3.4 per cent as the industry continued to recover from a big drop in September caused by production difficulties and maintenance shutdowns. 

David Madani, of Capital Economics, thinks November's growth was due, in part, to "what we believe was a very short-lived rebound in oil production." He thinks the Bank of Canada "will eventually have to cut interest rates again," because of the further slide in oil prices since December. 

U.S. growth weakens

South of the border, the U.S. Commerce Department reported Friday that GDP in the final three months of the year slowed sharply to an annual growth rate of 0.7 per cent.
 
The weaker growth pace was in line with economists' expectations. It followed annualized growth of 2.0 per cent in the third quarter.  

Analysts put much of the blame on a slowdown in consumer spending. It grew at an annual rate of 2.2 per cent, down from 3.0 per cent in the third quarter.  

But many analysts said they expect the slowdown to be short-lived.

"The weak growth is temporary," said Nariman Behravesh, chief economist at IHS Global Insight. "This is not an early warning of something worse."