Canada's economy shrank in November, and has only expanded by 1.9 per cent over the past 12 months as a whole. (Matt Rourke/Associated Press)
Canada's gross domestic product contracted by 0.2 per cent in November, as the economy was dragged down by cheap oil prices and unexpected weakness in manufacturing and mining.
Statistics Canada said Friday that for the 12-month period ending November as a whole, the economy expanded by 1.9 per cent — less than the 2.1 per cent that economists had been expecting.
It's also far less than the 2.6 per cent annual pace the U.S. economy is expanding at, according to a separate set of data released out of Washington on Friday.
The loonie, which has been on a slow decline since the fall of 2014, lost another half-cent on the news, falling to 78.66 cents US within seconds of the data coming out.
Statistics Canada says that during November, compared to October's level:
- Manufacturing output declined by 1.9 per cent.
- Mining was down by 2.5 per cent.
- Oil and gas extraction shrank by 0.7 per cent.
BMO economist Doug Porter said he was expecting declines in those sectors, but the numbers proved to be worse than even he had feared.
"While we were looking for declines in both, the drops were more intense than anticipated," he said in a note to clients early Friday.
The utilities sector was a rare bright spot in November, expanding by 2.4 per cent as demand for both electricity and natural gas rose.
The weak reading for November casts some doubt that the economy will manage to show growth for the fourth quarter as a whole, which includes December's data.
After eking out a gain of 0.3 per cent in October and then shrinking in November, the data for the end of the year are unlikely to show growth because much of the factors that made November weak — namely the decline in oil prices — continued to the end of 2014 and beyond.
"The weaker-than-expected headline implies Canadian GDP is looking soft in Q4," Scotiabank economists Derek Holt and Dov Ziegler said in a note to clients.
There's now a very real possibility that the economy will have shrunk for the quarter as a whole, for the first time in Canada since the end of 2009.
That won't be enough to start talking about the "R" word, however, as economists define a recession as two consecutive quarters of decline in GDP.
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