- Category: Economic
- Published Wednesday, December 23, 2015
- CTV News
Canada's economy was stable overall in October, as gains in the resource sector offset declines in production and consumer spending.
The country's gross domestic product was unchanged, after falling 0.5 per cent in September, according to Statistics Canada data released on Wednesday.
According to StatsCan, gains made in the resource industries and the public sector were offset by declines in manufacturing, utilities and retail trade. Its latest numbers showed the following:
- Mining, quarrying and oil and gas extraction rose 0.7 per cent in October, following a 4.7 per cent decline in September.
- The public sector (education, health and public administration) grew 0.2 per cent in October.
- Manufacturing output fell 0.3 per cent in October, after declining 1.0 per cent in September.
- Retail trade contracted 0.4 per cent in October, and wholesale trade edged down 0.1 per cent.
- The finance and insurance sector decreased 0.1 per cent in October, the third consecutive month of declines.
- Construction edged down 0.1 per cent in October.
Interest rate cut on the horizon?
News that the economy had failed to grow for the month of October prompted analysts to speculate if the Bank of Canada would again cut its key lending rate.
Capital Economics Senior Canada Economist David Madani said that the further decline in the export-orientated manufacturing sector will be "discouraging" to the Bank of Canada.
"It has pinned its hopes for growth on an export-led revival. But as we have warned before, this is simply wishful thinking," he wrote in a response to the StatsCan data.
"Overall, with the economy stagnating this quarter, the amount of excess slack will increase, creating more downside risk to the Bank of Canada's outlook for underlying inflation. This supports our long-held view that another interest rate cut is likely early next year, probably in April, though possibly sooner if oil prices fall any further."
Madani noted that despite showing a rebound in the summer, it appears that the economy "may never have escaped the recession” this year.
CIBC Capital Markets economist Nick Exarhos said the new figures could put Canada on track for zero growth in the fourth quarter. He also said that the lack of growth could mean the another interest rate cut the central bank is on the horizon.
In its monetary policy report released in October, the Bank of Canada had predicted growth of 1.5 per cent in the fourth quarter of 2015.
Oil prices to rebound…slowly
Meanwhile, OPEC predicted a slow rebound for oil prices in its annual World Oil Outlook.
The OPEC report, released Wednesday, said it expects oil prices to recover to US$70 a barrel in 2020, and US$95 a barrel by 2040. On Wednesday, the price of crude oil was US$37 a barrel.
With files from The Canadian Press