October 2022 GDP: Canadian output exceeding low expectations for the fourth quarter

Today’s GDP data suggest Canada’s economy continues to outperform low expectations. Real GDP growth is on pace for an annualized +1.4% in 2022Q4, which means earlier recession calls may have to wait until the New Year for resolution.

Stephen Tapp, Chief Economist, Canadian Chamber of Commerce

Key Takeaways

• Canada’s real gross domestic product (GDP) grew by 0.1% in October, as output gains in services were dragged down by falling goods production.This outcome is slightly better than the initial advanced estimate of essentially unchanged growth.
• StatCan’s advanced estimate for November is 0.1% growth (which was originally reported as 0%). Taken together, these estimates put real GDP growth on an annualized pace of almost 1.5% for 2022Q4, which is running ahead of the Bank of Canada’s forecast (0.5%).
• In October, output increased in 11 of 20 sectors. Services led the way rising by 0.3%, due to gains in the public sector, wholesale, and customer-facing industries. Goods production fell0.7%, due to declines in mining, oil and gas, and manufacturing.
• Notable movers on the month:
  • The recovery in “high-contact services” continues, as Canadians are taking flights (air transport, +5.5%), attending shows (arts, entertainment and recreation, +2.2%), and dining out at restaurants (food services and drinking places, +2.1%).
  • The public sector grew by 0.4%, led by the federal government (1.0%), while the health care sector (0.3%) responded to additional demand coming from the triple-whammy of COVID-19, respiratory syncytial virus and flu cases.
  • Wholesale trade (+1.3%) was active, reflecting the processing of new COVID variant boosters as well as farming products, which are supporting strong agricultural exports of wheat and canola this year.
  • Oil sands extraction fell by 3.9% due to scheduled maintenance that interrupted production.
  • Manufacturing (-0.7%) suffered its fourth decline in six months, falling to the lowest output level since December 2021.

Summary Table

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