Canadian Economy

CANADIAN ECONOMY

Real GDP Advances 0.6% in November; Manufacturing Up for Third Time in Four Months

HIGHLIGHTS

  • Real GDP rose 0.6% in November, the sixth consecutive monthly gain. A preliminary estimate indicates that real GDP was essentially unchanged in December.
  • The increase in GDP was widespread, spanning 17 of 20 industries, with wholesale trade, manufacturing, agriculture, forestry, fishing and hunting, and accommodation and food services making the biggest contributions to growth.
  • Manufacturing output advanced 1.4% in November, the third increase in four months.
  • Output was up in 7 of 11 major manufacturing subsectors, led by motor vehicle and parts and petroleum and coal products.
  • Today’s report suggests that real GDP by industry advanced at an annual rate of 6.4% in the fourth quarter and by 4.9% for the full-year 2021. While the Omicron wave dented economic activity in December and January, things are expected to turn around starting in February.

ECONOMY EXPANDS 0.6% IN NOVEMBER; MANUFACTURING UP 1.4%

Real GDP rose 0.6% in November, the sixth consecutive monthly gain. The increase lifted overall output above its pre-pandemic level for the first time. A preliminary estimate indicates that real GDP was essentially unchanged in December.

Manufacturing output advanced 1.4% in November, the third increase in four months. This gain brought manufacturing to within 2.5% of its pre-COVID level.

Today’s report suggests that real GDP by industry advanced at an annual rate of 6.4% in the fourth quarter and by 4.9% for the full-year 2021, following a 5.1% decline in 2020. While the Omicron wave dented economic activity in December and January, things are expected to turn around starting in February. Unfortunately, a shortage of workers and ongoing supply chain disruptions are likely to hamper the pace of the rebound.

NOVEMBER GAINS WIDESPREAD

The increase in GDP was widespread, spanning 17 of 20 industries, with wholesale trade, manufacturing, agriculture, forestry, fishing and hunting, and accommodation and food services making the biggest contributions to growth.

Output in the wholesale trade sector expanded 2.8% in November, the largest monthly increase since July 2020 and the fourth consecutive month of growth, as eight of nine subsectors posted gains. Building material and supplies wholesaling contributed the most to the growth, thanks to strong global demand.

Agriculture, forestry, fishing and hunting output grew 5.5% in November, led by crop production. This was the agricultural sector’s second straight monthly gain after contracting for 13 months in a row. As such, output was down 11.6% on a year-over-year basis in November.

Accommodation and food services climbed 3.4% in November, up for the first time in three months. Activity expanded in both accommodation services and in food services and drinking places, with the latter subsector benefitting from the lifting of capacity limits in restaurants and bars in Ontario and Quebec.

On the negative side, output in mining, quarrying, and oil and gas extraction decreased 1.8% in November, the first decline in seven months, with all subsectors contracting. Notably, coal mining output tumbled 17.2% as the flooding in BC disrupted exports through Vancouver marine terminals.

MANUFACTURING EXPANSION LED BY MOTOR VEHICLE AND PARTS AND PETROLEUM AND COAL PRODUCTS

Within manufacturing, output was up in 7 of 11 major subsectors. Motor vehicle and parts manufacturing output climbed 7.2% in November, building on the 18.7% gain in October. For the second straight month, automakers were able to ramp up production despite continuing to grapple with the global semiconductor shortage. Despite these back-to-back gains, output was down 17.1% compared to the same month a year ago.

Petroleum and coal product manufacturing rose 6.8% in November, up for the first time in three months. The increase coincided with higher exports of refined petroleum energy products.

Other industries that contributed to manufacturing growth in November included chemicals (+2.2%), wood products (+2.4%), and primary metals (+1.9%), while subsectors that subtracted from growth included plastics and rubber products (-3.1%), paper products (-2.8%), and machinery (-0.6%). Output in the paper products sector has declined for five consecutive months.