TORONTO – Canada’s economy unexpectedly shrank in October, weighed down by the worst manufacturing output in nearly three years, Statistics Canada said Friday.
Gross domestic product contracted by 0.3 per cent for the month, the first decline since wildfires devastated a swath of Fort McMurray, Alta. and dealt a severe blow to the oil and gas sector four months ago.
“StatsCan served up a dud to wrap up 2016,” BMO chief economist Doug Porter wrote in an analysis.
“Aside from the fire-damaged drop in May, this was the worst monthly reading for the economy in the past year. As much as I would love to tell you that it was due to one or two special factors, the weakness was relatively broad-based across the goods-producing sector, with declines in tourism-related sectors and finance thrown in for good measure.”
Manufacturing was down two per cent, the biggest monthly drop since December 2013.
The oil and gas extraction sector slipped 2.5 per cent in October after four monthly increases, while other industries including finance and insurance services, accommodation and food services, construction and agriculture also retreated.
Weakness in Canada’s goods-producing sectors, which contracted 1.3 per cent overall, was only partially offset by growth in some service-producing industries, which were up 0.1 per cent overall.
Real estate and rental and leasing rose 0.4 per cent. Wholesale trade and retail trade were up 0.6 per cent and 0.7 per cent, respectively.
TD senior economist Brian DePratto said the result was disappointing by almost any measure.
“That said, the October GDP figures should be taken in the broader context,” he said in a research note to clients.
“Despite the scale of the pullback, it was not sufficient to undo September’s healthy growth, which was revised up to 0.4 per cent.”
September’s growth had initially been pegged at 0.3 per cent by Statistics Canada.
Economists had generally expected October to be a flat month with zero growth, according to Thomson Reuters data.