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

  • Sears Canada faces online calls for boycott over treatment of ex-employees

    Economic CTV News
    TORONTO - Sears Canada is facing a social media campaign calling for a boycott after the company said it planned on paying millions in bonuses to keep executives on board during restructuring, despite not offering severance to laid-off workers. Source
  • BBC women demand immediate response to gender pay gap

    Economic CTV News
    LONDON -- Some of the BBC's most prominent female journalists and TV presenters are banding together to demand that the broadcaster fix its wide gender pay gap immediately rather than in several years as management has proposed. Source
  • New airport security rules and brewing beer battles: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    Miss something this week? Here's the consumer news you need to know from CBC-TV's Marketplace. Get this in your inbox every Friday. Sign up here. Flying to the U.S.? Read this "Enhanced" security measures went into effect this week for Canadians travelling to the U.S. Source
  • Credit agency pushes feds to give it access to list of social insurance numbers

    Economic CTV News
    OTTAWA -- An international credit reporting agency is pushing the federal government to give it access to a monthly list of new social insurance numbers despite years of rejections over privacy concerns. TransUnion made the request anew earlier this year, shortly after Patty Hajdu became labour minister, to access the list that contains the range of social insurance numbers issued each month in various regions of the country. Source
  • Canadians set record with U.S. real estate shopping spree

    Economic CBC News
    New Brunswick's Joel Levesque had no idea he was helping set a record when he bought a home in Fort Myers, Fla., back in April. The 63-year-old semi-retired public affairs professional wanted a place to escape for the winter and didn't feel like waiting around for the loonie to gain ground on the greenback. Source
  • Debt got you down? Start a debt-destruction club

    Economic CBC News
    If you run, hide, or plug your ears every time the topic of money comes up, you're not alone. But as the era of ultra-low interest rates comes to an end, you need to force yourself to face your finances. Source
  • Ontario transit agency won't let Bombardier bid to operate commuter trains

    Economic CTV News
    MONTREAL -- Ontario's transit agency has decided not to appeal a court ruling favouring Bombardier but will exclude the Montreal-based company from bidding to continue operating GO Transit trains as it has done for decades. Source
  • Business groups blast Ontario labour proposals on last day of consultations

    Economic CTV News
    TORONTO -- Unions and advocacy groups made one last effort Friday to sway the Ontario government on its plan for sweeping changes to the province's labour laws, with some sounding the alarm about what they deem drastic measures and others arguing the proposal doesn't go far enough. Source
  • Marijuana companies band together to develop marketing guidelines

    Economic CTV News
    TORONTO -- Sixteen of Canada's licensed marijuana producers have enlisted the help of Advertising Standards Canada to develop guidelines on how the drug should be branded and promoted before its recreational use becomes legal next year. Source
  • Husky Energy set to repair pipeline that spilled crude into river a year ago

    Economic CTV News
    CALGARY -- Husky Energy (TSX:HSE) says it has been granted permission to repair and replace a section of pipeline that leaked 225,000 litres of crude in Saskatchewan just over a year ago. Chief executive Robert Peabody said that it will be applying lessons learned from the spill on the rebuild. Source