OTTAWA – Canadian economic growth crawled back into positive territory in November, showing its first sign of life in the monthly data since the summer.
The latest reading for the country’s real gross domestic product showed that the economy expanded 0.3 per cent in November, an increase after zero growth in October and a contraction of 0.5 per cent in September, Statistics Canada said Friday.
It was the first time the economy grew since August, when there was a razor-thin increase of 0.1 per cent.
“It was a drama-free release — finally,” said Jimmy Jean, senior economist with Desjardins.
“After a couple of months of difficult economic performance, now we have finally a GDP report that we can deem as satisfactory.”
November’s GDP growth was mostly due to increased activity in retail and wholesale trade, energy extraction and manufacturing, the federal agency said.
Wholesale trade bounced back to expand 1.3 per cent in November after shrinking for four straight months.
Growth in retail trade increased 1.2 per cent following an October contraction of 0.2 per cent, while manufacturing saw an increase of 0.4 per cent after falling for two consecutive months, Statistics Canada said.
Jean pointed to all these gains as signals that the positives the Bank of Canada has been hoping for could be starting to materialize.
Overall natural resources extraction rose 0.6 per cent in November. Oil and gas extraction increased 2.1 per cent to help offset the weight of the mining and quarrying component, which declined 2.3 per cent.
Downward pressure on GDP — a broad measure of the economy — also came from the finance and insurance sector, which contracted 0.3 per cent for its fourth straight monthly decline.
The GDP reading was released as Canada limps through the net negative effects of a commodity price shock that began in late 2014.
The figure tees up a potentially weak GDP number for the fourth quarter amid downgraded expectations for the final three months of last year.
Experts are predicting feeble if any growth in the fourth quarter, but Desjardins’ Jean says the first quarter of this year could be headed in the right direction based on Friday’s data.
“(The fourth quarter) has already been written off as a disappointment,” he said.
The Bank of Canada recently lowered its GDP forecast for the fourth quarter to 0.3 per cent, down from 0.7 per cent. Earlier this month, the central bank also decreased its GDP prediction for the first quarter of 2016 to 0.8 per cent and for the second quarter to 1.4 per cent.
Canada’s economy fell into the technical definition of a recession in the first half of 2015 when GDP fell for two straight quarters. It decreased at an annual pace of 0.7 per cent over the first three months of 2015 and again by 0.3 per cent in the second quarter.
In the third quarter, however, GDP rebounded by generating 2.3 per cent growth.
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