Stalled GDP could spur interest rate cut: economist

Canada's economy didn't grow in October, and that has analysts wondering if the central bank could be eyeing another cut to its key lending rate.

See Full Article

Statistics Canada data released on Wednesday showed Canada's economy was stable overall in October as gains in the resource sector helped offset declines in factory production and consumer spending.

CIBC Capital Markets economist Nick Exarhos said the weak results undercut expectations that the Canadian economy had rebounded in October after shrinking in September.

Without the rebound in the mining sector, the country would have seen another economic contraction after September's 0.5 per cent annualized decline, Exarhos said in a brief commentary.

He said the new GDP figures put the country on track for zero growth in the fourth quarter, and could signal another interest rate cut from the Bank of Canada if things don't improve.

In its most recent monetary policy report, in October, the bank had predicted growth of 1.5 per cent in the last three months of the year.

Statistics Canada said Canada's gross domestic product -- a broad measure of the economy -- was flat overall in October.

Commodity-based industries including mining, quarrying and oil and gas extraction posted slight gains after major declines in September, and the public sector grew slightly.

That was offset by declines in manufacturing, retail trade and utilities. Spending on natural gas and electricity also fell as much of the country experienced mild weather in the weeks before Halloween.

TD economist Brian DePratto wrote in a research note that the Canadian economy should rebound towards modest growth in 2016, but that projection rests on rising demand for Canadian exports -- and that growth in demand is currently nowhere to be found.

"As a result, the risks are skewed to the downside and we cannot rule out further easing should we see continued material disappointment in Canadian economic growth," he said.

Mining, quarrying, and oil and gas extraction rebounded in October, rising 0.7 per cent after falling 4.7 per cent in September. The use of non-conventional sources of oil such as the Alberta oilsands rose 0.8 per cent after a 10.6 per cent decrease in the previous month.

The finance and insurance sector declined for a third consecutive month, falling 0.1 per cent despite a gains in financial investment services.

Statistics Canada also released data showing October retail sales posted a small rise of 0.1 per cent and actually fell by 0.3 per cent in terms of volume.

Ontario and Quebec posted higher sales in the month, while retail receipts in British Columbia, Alberta and Nova Scotia declined. Alberta, which has been hit hard by the plummeting price of oil, saw its retail sales fall for the third month in a row.

BMO chief economist Douglas Porter said retail sales were a wet blanket, and provided the latest evidence that 2015 was a bad year for the Canadian economy.

In a research note, Porter described Canada's 12 months of economic challenges to the tune of "The 12 Days of Christmas," including the five straight months of negative GDP, three fiscal updates, two surprise rate cuts and a loonie in a swan dive.



Advertisements

Latest Economic News

  • TransCanada: Over 24K gallons of oil recovered from spill

    Economic CTV News
    AMHERST, S.D. -- TransCanada Corp. says it has recovered more than 24,000 gallons of oil from the site of a pipeline leak discovered last week in South Dakota. The company said 24,450 gallons of oil had been recovered as of Wednesday. Source
  • Aurora Cannabis buying greenhouse designer Larssen to push pot partnership plans

    Economic CBC News
    Aurora Cannabis Inc. says it intends to use its ownership of greenhouse design firm Larssen Ltd. to pressure other cannabis producers to enter partnerships that will further its aggressive growth plans. In a news release, the Alberta-based cannabis producer said Larssen is involved with more than 15 cannabis industry clients globally, including five Canadian licensed producers, but the Canadian deals will be reassessed once the buyout announced Thursday is completed. Source
  • Canadian house prices 50% overvalued compared to rents: OECD

    Economic CBC News
    Canada leads the world in terms of household debt levels, and it's a major risk to the country's economy, the OECD says in a new report. In a chapter of a report set to come out next month that has been released in advance, the Organization for Economic Co-operation and Development says that while virtually all countries saw their debt loads increase in the years leading up to the credit crisis of 2007, most have seen their indebtedness decrease over time. Source
  • Uber hack latest example of why vigilance required to keep your wallet safe

    Economic CBC News
    When Doug Hoyes had his credit card information stolen, fraudsters used it to pay for three taxi rides in Toronto. He wasn't in that city, but discovered the charges while routinely checking his card transactions online and notified his bank, which cancelled the card. Source
  • Security alert: How vigilance can keep contents of your wallet safe

    Economic CTV News
    OTTAWA -- When Doug Hoyes had his credit card information stolen, fraudsters used it to pay for three taxi rides in Toronto. He wasn't in that city, but discovered the charges while routinely checking his card transactions online and notified his bank, which cancelled the card. Source
  • Canadian drug-maker accused of abusing market dominance

    Economic CTV News
    OAKVILLE, Ont. -- Britain's competition regulator is accusing Canadian specialty drug company Concordia International Corp. of overcharging for a thyroid drug after raising the price by nearly 6,000 per cent between 2007 and 2017. In a statement of objections, the Competition and Markets Authority is alleging Concordia abused its market dominance in the supply of liothyronine tablets. Source
  • Regulator investigating Sears Canada liquidation sale prices: monitor

    Economic CTV News
    TORONTO -- The Competition Bureau is investigating allegations that prices on some merchandise were marked up ahead of the liquidation sales at Sears Canada that began last month, the court-appointed monitor overseeing the retailer says. Source
  • Retail sales inched up in September, but only because of higher gas prices

    Economic CBC News
    Retail sales inched up 0.1 per cent to $49.1 billion in September largely because of higher prices at gas stations. Statistics Canada reported Thursday that retail sales were up in five of 11 sectors of the economy that the agency tracks. Source
  • Aurora Cannabis to buy greenhouse design firm Larssen, terms not disclosed

    Economic CTV News
    VANCOUVER -- Aurora Cannabis Inc. has signed a deal to acquire greenhouse design firm Larssen Ltd. Financial terms of the deal were not disclosed, but Aurora says it includes performance-based milestone payments. Aurora (TSX:ACB) chose Larssen to design, engineer and oversee construction of its Aurora Sky facility. Source
  • 'Nobody ever showed up': $35K spent on renovations that never began

    Economic CTV News
    An Ontario couple is trying to get their money back after they paid $35,000 in upfront costs for a home renovation that never even started because the owner of the business hired to complete the work sold it to another buyer. Source