Canada’s economic growth recovers in November, likely grew above BoC’s expectations in Q4

Canada’s economic growth rebounded in November. The economy expanded 0.4 percent sequentially, a bit higher than consensus expectations of a 0.3 percent growth. This is more than enough to counter October’s 0.2 percent contraction. The goods-producing industries rebounded, growing 0.9 percent in the month, driven by mining and quarrying, construction and manufacturing. All of them recovered after contracting in the prior month.

In the manufacturing sector, growth was broad based, with output increasing by over 3 percent sequentially in several industries. Manufacturing of transportation equipment dropped for the third straight month with the ‘miscellaneous’ category leading the way down, noted TD Economics in a research report. On the services front, it was an optimistic result as output was up 0.2 percent in the month, led by finance and insurance. Retail trade, transportation and management also registered growth.

Growth was pretty broad based in the month. The healthy figures for November add to the evidence that Canada’s economy continues to shake off some of the setbacks earlier in 2016. Canadian economy is expected to have grown above the central bank’s projection of 1.5 percent in the fourth quarter; however, a considerable amount of economic slack would remain however, added TD Economics.

“The Bank of Canada will probably be happy to leave its policy interest rate at 0.50 percent well into the future, helping to support the ongoing absorption of the remaining slack”, stated TD Economics.