Quick take

Economy soared in October (before anyone had heard of Omicron)

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  • In October, real GDP grew by 0.8 per cent (m/m), following 0.2 per cent growth in September. October’s results were on par with Statistics Canada’s expectations.
  • Statistics Canada’s preliminary estimate suggests that real GDP grew by 0.3 per cent in November. This growth was led by strength in customer-facing industries like accommodation and food services and arts, entertainment, and recreation.
  • Goods-producing industries grew by 1.6 per cent in October. In absolute terms, the manufacturing industry contributed most to this expansion. The construction (+1.6 per cent) and mining, quarrying, and oil and gas extraction (+1.5 per cent) sectors also posted significant gains.
  • Service-producing industries posted 0.6 per cent growth in October. In relative terms, the arts, entertainment, and recreation industry grew the most (+7.1 per cent). In absolute terms, the real estate and rental and leasing and professional services sectors contributed most to overall growth.

Key insights:

  • Sparks flew in October as Canada’s production lines picked up the pace. Economic expansion was driven primarily by stronger manufacturing output. Many manufacturing subsectors posted gains, but greater production in motor vehicle manufacturing carried the day. Some manufacturers were able to get their hands on semiconductors in October, though sustainable supplies likely won’t be around until later in 2022. Most other sectors posted gains save for a few, including the public administration and accommodation and food services industries.
  • But the halcyon days of October seem distant from the topics of today’s headlines. Amid the steady refrain of supply chain struggles, November saw new trouble added to the mix. Severe flooding in British Columbia washed out rail and road infrastructure, and temporarily cut off the Port of Vancouver from the rest of Canada. The impact of the floods will likely make its mark in December’s GDP data.
  • History doesn’t repeat itself, but it rhymes. And the end of 2021 is starting to feel a lot like—if not Christmas—the end of last year, when curfews and capacity limits ruled the day. The Omicron variant will pose challenges to growth in the coming months. Though the severity of this pandemic episode isn’t fully known, travel advisories and reimposed restrictions across many provinces threaten to dampen economic activity again. Rapid testing and vaccine boosters may dull the sting of this wave. But, for restaurants, tourism operators, and many other high-contact businesses, the end of the pandemic saga keeps getting kicked down the line.

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Kiefer Van Mulligen

Kiefer Van Mulligen

Economist

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