It appears that the continued upward climb of Canada’s economy continued on the trajectory for October, as real GDP increased by 0.4%, following a 0.8% increase in the month prior. This is the sixth consecutive month of gains, as economic growth continues to offset the record contraction observed back in March and April as a result of the pandemic.
According to the latest data released by Statistics Canada, economic activity rose by 0.4% in October, putting GDP levels just 4% below February’s pre-pandemic levels. Both service-producing and goods-producing sectors recorded 0.5% and 0.1% growth, with 16 out of the 20 industrial sectors noting increases.
Finance and insurance expanded by 0.8% in October, as trading activity of federal government bonds, coupled with increased activity in the money market and repo bond market contributed to the momentum. Canada’s public sector also recorded growth of 0.7% in October, with health care, social assistance, and educational services posting gains. Education services in particular posted increases of 0.9% for the sixth consecutive month, as teachers across the country continue their efforts in delivering education both in-person and virtually amid such unprecedented times.
Construction activity increased by 0.7% in October, following a 0.6% decline in the prior month, as residential construction of both single-unit and multi-unit dwellings rose by 1.9%. Conversely though, non-residential construction dropped by 2.1%, with all three types of non-residential construction including commercial, industrial and public recording declines.
The accommodation and food services sector was also down for the month of October, with activity contracting by 3.9%. The decline is largely due to the rise in Covid-19 cases across the country, as well as increased public health measures related to indoor dining. Accommodation services also noted a decline of 2.1%, as both domestic and international travel remained subdued due to the continued enforcement of restrictions.
Canada’s manufacturing sector also took a nosedive in October, after recording five straight months of growth. As noted by Statistics Canada, manufacturing dropped by 0.8%, with the largest contributions to the overall decline stemming from the transportation equipment, machinery, and fabricated metal product manufacturing sub-sectors.
In the meantime, the country’s mining, quarrying, and oil and gas extraction sector remained relatively unchanged in October, as declines in mining and quarrying were largely offset by gains in oil and gas extraction. For the second month in a row, oil and gas extraction increased by 1.2%, while mining and quarrying dropped by 3.7%, with the decline being largely fueled by declines in potash mining and metal ore mining.
According to Statistics Canada preliminary estimates for November, real GDP levels expanded by 0.4%, with the largest contributions in gains stemming from manufacturing, wholesale trade, and finance and insurance. Construction on the other hand, hindered the increase.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.