November's GDP Data Beats the Forecast! What Does This Data Mean for the Canadian Economy?

<p>&nbsp;Canada's economy posted a better-than-expected reading in November with growth of 0.2%, and data on Wednesday showed that domestic output likely expanded in the fourth quarter, reflecting a recovery in economic activity.</p><p><br /></p><p>Analysts polled by Reuters had forecast GDP growth of 0.1% in November compared to October. The increase in November followed three consecutive months of almost zero growth. In preliminary estimates for December, Statistics Canada said the economy likely expanded by 0.3%, meaning annual growth of 1.2% in the fourth quarter.</p><p><br /></p><p><br /></p><p>This December figure will be confirmed with the final data released next month. If it is positive then it means the economy avoids a technical recession which is defined as a continuous two-quarter contraction. In the third quarter, Canada's GDP shrank by 1.1%.</p><p><br /></p><p>The Bank of Canada lowered its growth estimates for 2023 and 2024 last week. For the fourth quarter ending in December, the central bank has forecast zero growth compared to a previous forecast for an increase of 0.8%. Although the bank does not expect a recession, Governor Tiff Macklem has indicated that small deviations from low growth estimates could result in a small contraction.</p><p><br /></p><p>Growth in November was led by goods production industries such as agriculture, mining, and construction. These industries saw the highest growth rates since January 2023, Statscan reported. Canada's goods-producing sector expanded by 0.6% on a monthly basis in November, while the services-producing sector grew by 0.1%, the data showed.</p>