Statistics Canada has reported a 0.3% growth in the Canadian economy for October, boosted by the mining, quarrying, and oil and gas extraction sectors. This follows a 0.2% increase in September. Services-producing industries saw a modest 0.1% growth, marking their fifth consecutive month of increases, while goods-producing industries rebounded with a 0.9% rise after four months of declines.
The mining, quarrying, and oil and gas extraction sectors recorded a robust 2.4% growth, with oil and gas extraction contributing a significant 3.1% increase. Manufacturing also improved by 0.3%, driven by gains in non-durable goods production.
CIBC senior economist Andrew Grantham described the October gains as “a larger-than-expected stride forward,” though preliminary data for November indicates a slight contraction of 0.1%. Decreases in mining, transportation, and finance were partially offset by growth in accommodation, food services, and real estate.
Grantham noted that Q4 GDP is tracking slightly below the Bank of Canada’s projections, emphasizing that further interest rate cuts might be necessary in the new year. The Bank of Canada is expected to lower its key policy interest rate by 0.25 percentage points in January.
Real estate and rental sectors experienced a 0.5% increase, marking their sixth consecutive monthly rise, driven by heightened home sales in major markets such as Toronto and Vancouver. The construction sector grew by 0.4%, bolstered by non-residential building activity, while wholesale trade expanded by 0.5%, with building materials and lumber showing notable contributions.
Despite the positive momentum, Canadian Chamber of Commerce senior economist Andrew DiCapua warned of challenges ahead, including tariffs, reduced immigration targets, and economic uncertainty. However, he acknowledged the encouraging end to the year, with GDP growth tracking close to 2% for the fourth quarter.
The Bank of Canada’s decisions in January could be influenced by this momentum, potentially leading to a slower pace of rate cuts in the coming year.
