Canada: GDP rebounds in October - NBF

Today’s data showed Canada’s real GDP rose 0.3% in October. Krishen Rangasamy, an analyst at National Bank of Canada, highlights positive contributions to growth from both goods and services in 2018.

Key Quotes:

“A rebound was expected for Canada’s GDP after a weak September. But what was particularly encouraging was the breadth of the increase as 15 of the 20 broad industrial sectors saw gains in October. Even some sectors seeing declines were affected by temporary factors including postal strikes (transportation) and wildfires (agriculture & forestry). The manufacturing sector’s output rebound was due to strong exports and some inventory building. Oil & gas was also strong in October, enough to cement that sector’s lead in terms of output growth this year.”

“One disappointment from October’s report, however, was retail spending which barely grew during the month.”

“On a positive note, however, the manufacturing sector could benefit in 2019 from the federal government’s tax incentives, a cheap Canadian dollar and the opening up of new markets.”

“The goods sector saw output jump 0.3%, more than erasing the prior month’s decline courtesy of higher output in manufacturing (+0.7%), oil & gas (+3.6%), and utilities (+1.5%) which dwarfed declines in construction (-0.1%), mining (-4.3%) and agriculture & forestry (-1.1% due to disruptions caused by wildfires in British Columbia). As a result, industrial production rose 0.7%.”