Canada’s economic system slows in October, however nonetheless resilient after fee hikes By Reuters

By Ismail Shakil and Steve Scherer

OTTAWA (Reuters) -The Canadian economic system grew by 0.1% in October and is predicted to increase on the similar tempo in November, knowledge confirmed on Friday, an indication that the total influence of seven consecutive rates of interest hikes this yr has but to play out.

October development slowed in contrast with September’s 0.2% achieve, which was an upward revision from a beforehand reported 0.1% enhance, Statistics Canada mentioned. October’s enhance was according to a median of analysts’ forecasts.

“The upward revision to September and modest development in October leaves This autumn GDP monitoring above the Financial institution of Canada’s… forecast,” mentioned Andrew Grantham, senior economist at CIBC Capital Markets, in a notice.

The newest figures present that development is “holding up maybe a bit higher than anticipated for This autumn,” mentioned Robert Kavcic, Senior Economist at BMO Capital Markets, in a notice.

“The actual query will likely be how issues shake out through the first half of subsequent yr, when aggressive Financial institution of Canada fee hikes begin to extra totally work their manner by means of the system,” Kavcic mentioned.

The Financial institution of Canada has hiked charges at a report tempo of 400 foundation factors in 9 months to 4.25% – a degree final seen in January 2008 – to struggle inflation that’s far above its 2% goal.

Canada’s annual inflation fee eased to six.8% in November, however was barely greater than had been anticipated due to broad-based worth pressures, in line with knowledge from earlier this week, leaving the door open for one more fee enhance in January.

The financial institution has mentioned will probably be extra data-dependent in setting the coverage fee. Cash markets see a greater-than-50% probability of a 25 foundation level hike on Jan. 25.

In October, the companies suppliers gained by 0.3%, led by good points in public sector, wholesale and client-facing industries, Statscan mentioned.

Items-producing industries posted a 0.7% lower in October after 4 steady months of development, primarily because of a lower in mining, quarrying, and oil and gasoline extraction and weakening within the manufacturing sector.

November’s preliminary estimate displaying a 0.1% month-to-month enhance in GDP was pushed by good points in utilities and wholesale commerce, Statscan mentioned.

“Whereas there are upside dangers to our forecast that GDP will likely be unchanged this quarter, we proceed to anticipate GDP to contract in early 2023,” Stephen Brown, senior Canada economist at Capital Economics, mentioned in a notice.

The Canadian greenback was buying and selling practically unchanged at 1.3645 to the buck, or 73.29 U.S. cents.