Canadian economic growth unchanged in October on softness in oil and gas sector

Canada’s economic output remained unchanged in October, as softness in the mining, quarrying, oil and gas sector was sufficient to counter sound gains elsewhere. Out of the 20 major industries, 12 saw output rise.

The goods-producing side of the economy disappointed. Quarrying, mining and oil and gas extraction dropped 1.1 percent, driven lower by declines in non-conventional oil extraction. This partly showed a loss of capacity because of maintenance operations. Mining excluding oil and as also dropped on softness in potash mining. Meanwhile, utilities output dropped 1.3 percent, while construction and manufacturing were both flat on the month.

On the contrary, the services side of the economy kept humming along, rising for the 19th straight month. Strong gains in wholesale trade and retail trade drove the rise, with the other major sectors turning in mixed performances.

With almost all monthly indicators looking healthy, the oil sector threw a wrench in what was otherwise looking like a solid month, noted TD Economics. While there remains cause for optimism as many one-off factors reverse, there does seem to be less momentum heading into the fourth quarter.

“As it stands today, fourth quarter growth now looks likely to come in below the Bank of Canada's expectations of 2.5 percent (annualized). Given the data-dependency of the Bank of Canada, this means that a hike in January is less likely”, added TD Economics.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bullish at 123.235, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -14.9552. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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