November 2024 GDP: Broad-based slump in growth temporary.

“November’s GDP slump shouldn’t derail a decent fourth quarter, keeping 2024 on track for 1.4% growth. Interest rate–sensitive sectors grew right on cue, thanks to more supportive interest rate levels. We expected transportation to slip due to strikes, but a broader slump is worrisome. The holiday tax break only kicked in mid-December, but consumer spending looks solid and will be an upside to growth.

Still, the Bank of Canada is facing immense uncertainty this year. Interest rates are in a better position to handle unprecedented challenges ahead. As we brace for impact on tariffs, November could be just the first of many sluggish months ahead.”

Key takeaways

Real gross domestic product dropped 0.2% in November, below expectations of -0.1%. This was a broad-based slowdown with 13 of 20 sectors posting negative growth, with goods (-0.6%) and services (-0.1%) sectors down on the month, following October’s strong growth.

Industry breakdown

• The real estate sector experienced seven months of growth, expanding 0.3% in November. Lower interest rates are supporting resale activity and home prices are starting to pick up.
• Construction grew 0.7% on the month due to higher construction of residential homes, specifically single-family dwellings. Non-residential construction also picked up in November.
• Accommodation and food services grew 1.4%, supported by the Taylor Swift concert tour, which elevated demand for accommodation services and food and drinking establishments.
• Transportation and warehousing declined 1.3% in November, with various labour disputes for postal workers and the ports of Montreal and Vancouver negatively impacting growth in November. Postal services were down 20%, with rail and water transportation subsectors also declined 3% and 5% respectively.
• Mining, oil, and gas extraction has been the bell-weather of the Canadian economy slipped on growth in November. Oil sands extraction was a drag on growth (-3.4%). Coal and metal ore mining were also down. The utilities sector contracted 3.6% on lower demand for electric power generation and transmission.

Outlook and implications

• The advanced estimate for real GDP in December suggests a boost of 0.2%, putting 2024 on track to grow 1.4%. This is slightly above the Bank of Canada’s forecast of 1.3% in their January Monetary Policy Report.
• The economy is showing momentum in certain sectors, like retail sales, construction, and manufacturing. Hours worked in the Labour Force Survey are showing 0.5% growth in December, some upside to Q4 GDP growth.
• The outlook for the Canadian economy remains uncertain. The Bank of Canada lowering its policy interest rate again in January will help stimulate growth. While the holiday GST rebate offers some relief for households in the next few months, it’s unclear if spending will lift overall growth. Broader challenges face the economy as we brace for impact on tariffs.