Canada's GDP Cools After Robust October Growth

Canada's economy experienced a slight slowdown in November, following a stronger-than-expected 0.3% growth in October. Preliminary data from Statistics Canada indicates that industry-level gross domestic product (GDP) dipped 0.1% in November, with weakness in natural-resources extraction, transportation and warehousing, and finance and insurance partially offset by increases in accommodation and food services, and real estate, rental and leasing.

The October growth was driven by a rebound in oil sands extraction and manufacturing, which had been impacted by maintenance outages and retooling. Oil sands extraction saw its strongest growth since December 2020, expanding 2.4% from September, while manufacturing advanced following three monthly declines. Educational services and auto exports also contributed to the overall GDP growth.



However, the November contraction may have dampened consumer and business confidence, as indicated by a slowdown in consumer spending and business investment. The Bank of Canada's recent rate cuts aimed to cool inflation and support economic growth, but the pace of recovery remains uncertain.

The Bank of Canada may maintain a cautious stance regarding future monetary policy decisions, as the November contraction was driven by weakness in natural-resources extraction and transportation, partially offset by increases in accommodation and food services. The Bank may wait for more data to assess the economy's trajectory before deciding on further rate cuts.

In conclusion, Canada's economy experienced a slight slowdown in November after a robust October growth. The Bank of Canada's recent rate cuts aimed to cool inflation and support economic growth, but the pace of recovery remains uncertain. The Bank may maintain a cautious stance regarding future monetary policy decisions, as it awaits more data to assess the economy's trajectory.