The Canadian economy expanded in November by 0.2% on a month-over-month basis, slightly exceeding expectations after staying flat for three months.
The goods-producing industries were responsible for most of the expansion, growing by 0.6%, the highest rate since January last year. Meanwhile, the services-producing industries grew by 0.1%, according to data released by Statistics Canada on Wednesday.
A soft landing is still in the cards, and the Bank of Canada said that it was not expecting a full-scale recession as the economy seems to still be crawling along. But the economy is in a delicate position, and prolonged restrictive financial conditions could tip the scale the other way.
Manufacturing, though, was a bright spot, growing by 0.9% and offering encouraging news for a backbone of the Canadian economy.
Even more encouraging was that the advance estimate for December’s real gross domestic product indicates that GDP could increase by 0.3%, because of expansion in manufacturing, real estate, and mining and oil and gas.
Read more of RSM Canada’s insights on the economy and the middle market.
Personal and household goods wholesaling increased by 2.1%. Information and cultural services rose by 0.5% in November after five consecutive monthly declines as the Hollywood strikes ended. It is a reminder of how closely connected the American and Canadian economies are.
On a year-over-year basis, GDP grew by 1.1%, with the goods-producing industries contracting by 0.6% while services-producing industries grew by 1.7%.
The GDP report provides some uplifting news for Canada. That said, the timing of the Bank of Canada’s decision to cut rates will depend on inflation and employment data. A small increase would support a possible soft landing, and would suggest a rate cut sooner rather than later.
The first quarter of this year will soon show whether or not the Canadian economy has enough resilience to push through until the first rate cut, which should occur in April.