By Promit Mukherjee
OTTAWA (Reuters) – Canada’s economy contracted more than expected in November as activity across a majority of sectors shrank due to work stoppages in inland transportation and at ports, Statistics Canada said on Friday.
The country’s gross domestic product shrunk by 0.2% in November on a monthly basis from a 0.3% rise in October, led by contraction in mining, quarrying, oil sands extraction and transportation, Statistics Canada said.
Analysts polled by Reuters had estimated the GDP to drop by 0.1% in November and economists foresee a bounce-back in December.
A preliminary estimate shows that GDP is likely to rebound by 0.2% in December, led by increases in retail trade, manufacturing and construction, the statistics agency said.
Currency swap markets showed traders trimmed the chances of a 25-basis-point rate cut by the Bank of Canada in March to 53.9% from 54.2% before the data were released.
The Canadian dollar was little changed at C$1.4468, or 69.12 U.S. cents.
The December figures will be announced next month when Statscan will also publish the fourth-quarter economic growth number.
According to its initial estimate, annualized fourth-quarter GDP is likely to be 1.8%, or similar to what the Bank of Canada had forecast in projections published this week.
The central bank has been concerned about the slow pickup in economic activity despite several rounds of rate cuts. It has reduced interest rates by a cumulative 200 basis points since June to 3%.
After announcing a 25-bps cut this week, Governor Tiff Macklem said growth was picking up, but it would want it to be sustained.
The bank revised its 2025 GDP growth forecast downward to 1.8% from 2.1% earlier, led by a decline in population this year.
The growth forecast figures can be further dented if U.S. President Donald Trump slaps a 25% tariff on all Canadian imports starting on Saturday.
The services-producing industries contracted by 0.1% in November, with transportation and warehousing leading the drop with a contraction of 1.3%, its largest decline in two years. This was led by a work stoppage in postal services and labor actions at ports, Statscan said.
Within the goods-producing industries, mining and quarrying and oil and gas extraction dropped by 1.6%.
(Additional reporting by David Ljunggren; Editing by Rod Nickel)
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