Canada's economy posted a better-than-expected reading in November with growth of 0.2%, and data on Wednesday showed that domestic output likely expanded in the fourth quarter, reflecting a recovery in economic activity.
Analysts polled by Reuters had forecast GDP growth of 0.1% in November compared to October. The increase in November followed three consecutive months of almost zero growth. In preliminary estimates for December, Statistics Canada said the economy likely expanded by 0.3%, meaning annual growth of 1.2% in the fourth quarter.
This December figure will be confirmed with the final data released next month. If it is positive then it means the economy avoids a technical recession which is defined as a continuous two-quarter contraction. In the third quarter, Canada's GDP shrank by 1.1%.
The Bank of Canada lowered its growth estimates for 2023 and 2024 last week. For the fourth quarter ending in December, the central bank has forecast zero growth compared to a previous forecast for an increase of 0.8%. Although the bank does not expect a recession, Governor Tiff Macklem has indicated that small deviations from low growth estimates could result in a small contraction.
Growth in November was led by goods production industries such as agriculture, mining, and construction. These industries saw the highest growth rates since January 2023, Statscan reported. Canada's goods-producing sector expanded by 0.6% on a monthly basis in November, while the services-producing sector grew by 0.1%, the data showed.
