Canadian economic growth expands sequentially in October

Canada’s economy grew 0.3 percent sequentially in October. The growth came from a healthy base, as 15 of 20 major industries expanded on the month. On the services front, growth came in at 0.3 percent. Marked strength was seen in finance and insurance and wholesale trade, with the latter more than reversing its September pull-back. Transportation and warehousing was an exception, as rotating strikes at Canada Post contributed to a -0.3 percent change in October, noted TD Economics in a research report.

Goods-producing sectors recorded a growth of 0.3 percent, driven by a strong growth in manufacturing activity, which rose 0.7 percent, underpinned by the machinery and primary metals subsectors. Utilities recorded a growth of 1.5 percent, aided by extreme snowfall in Alberta and cool weather throughout the nation in October. The mining, quarrying, and oil and gas sector rose modestly as a whole. A recovery in oil and gas after earlier shutdowns aided in countering weakness in the mining subsectors.

After a couple of months treading water, the Canadian economy saw a strong growth in October. The breadth of the growth was especially encouraging, even as construction activity continued to be a soft point for a fifth consecutive month.

November saw the worst of the discounts on Canadian oil bends, and voluntary production curtailments are expected to be a drag on activity, noted TD Economics in a research report. This would sap overall growth, even before mandatory production cuts come into effect in January, expected to drag the first quarter of 2019 growth lower by around a percentage point.

“Even with today's data, we are tracking Q4 growth at a modest 1.7 percent (q/q saar), below the Bank of Canada's October forecast of 2.3 percent. With the oil sector still facing elevated uncertainty due to low (and volatile) global prices, and core inflation measures well-contained, the urgency to hike interest rates has clearly lessened”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at 9.35254, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -31.9069. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex