Canadian gross domestic product grew at the fastest pace in five months on a lift from manufacturing, while oil made an unexpected contribution as prices began to fall for Alberta crude.
Output grew 0.3% in October, Statistics Canada said Dec. 21 from Ottawa, faster than the median forecast in a Bloomberg economist survey of 0.2%.
Factory production expanded 0.7% to make up most of the losses over the prior two months, while wholesaling climbed 1%. The highest volume of trading since March 2016 on Canada’s benchmark stock exchange in Toronto also boosted the finance and insurance industry by 0.9%.
The GDP report is the last one Bank of Canada policy makers will see before they set interest rates and update their quarterly forecasts on Jan. 9. Governor Stephen Poloz has said how soon he adds to his five rate increases since mid-2017 will depend on fresh data, and that he needs to assess the drag from a drop in Alberta oil prices.
There wasn’t much direct evidence of an energy slump in the October GDP figures. Oil and gas extraction climbed 3.6% as producers returned sites to service after maintenance shutdowns. The provincial government in Alberta has ordered production cuts in January that could slow growth from here.
“The Canadian economy managed to churn out hearty growth overall in October,” Bank of Montreal Chief Economist Doug Porter said in a research note. The economy will expand at a 1.5% annualized pace in the fourth quarter and slow to 1% in the first three months of 2019, with output “particularly challenged” by Alberta’s oil curtailments, he said.
The economy’s main weak point in October was the fifth straight decline in construction, which fell 0.1%.
The GDP report didn’t include figures on the sale of newly legal marijuana, with Statistics Canada planning to add them in March. A separate report released by the agency Dec. 21 on retailing pot sales totaled C$43 million ($32 million) in the two weeks after legalization on Oct. 17.
That retail report showed overall sales climbed 0.3% in October, driven by auto dealers and gas stations. That was slower than the median economist forecast for a 0.5% gain.