MNI DATA ANALYSIS:Canada November GDP Lives Up To Expectations>

By Yali N'Diaye

     OTTAWA (MNI) - Canada's economic activity rebounded 0.4% in 

November, the largest gain since May 2017, living up to market 

expectations following a disappointing flat performance in October, data 

from Statistics Canada showed Wednesday. 

     Gains were widespread across the goods and services industries, 

with 17 of 20 industrial sectors expanding during the month. 

     November also benefitted from the return to production capacity in 

some goods sectors after planned shutdowns, while a previous strike in 

the public sector ended during the month of November. 

     Services output increased 0.3% and goods production rose 0.8%, the 

largest increase since May 2017. 

     --ENERGY REVERSAL 

     The energy weakness observed in October was partly reversed in 

November. 

     Mining, quarrying, and oil and gas extraction was up 0.5%, as 

non-conventional oil extraction increased 1.6%, owing to the ramp-up to 

normal capacity following maintenance turnarounds since mid-September. 

     Overall, however, energy production edged up just 0.1% in November 

after falling 1.1% in October, due to weakness in coal mining and 

refineries. 

     --STRONG MANUFACTURING 

     A 1.8% surge in manufacturing production, the largest since 

February 2014 boosted the performance of the goods-producing sector. 

     In particular, durable manufacturing production rose 2.5%, the 

largest increase since December 2011, owing to strong activity in 

transportation equipment. 

     The agency pointed out the 14.3% rebound in motor vehicle 

manufacturing, with auto assembly supported by the return to production 

of some plant capacity following shutdowns in September and October. 

     Non-manufacturing output rose 1.1%, largely as a result of a 5.3% 

expansion of chemical manufacturing. 

     GDP excluding manufacturing was up 0.3% on the month, after being 

flat in October. 

     --SERVICES EXPANSION CONTINUES 

     Meanwhile, the expansion in services continued, with widespread 

gains across sectors, including a 0.6% increase in retail sales, which 

benefitted from promotional events related to Black Friday. 

     Public sector production was up 0.2% after being flat in October, 

with educational services recovering 0.2% after edging down 0.1% in 

October, when the universities subsector was affected by strikes that 

ended November 19. 

     Overall the report was strong and more than offset October's weak 

performance, showing that the economy kept a solid momentum in the 

fourth quarter despite two Bank of Canada rate hikes in July and 

September. 

     Still, assuming GDP was flat in December, annualized growth would 

slow to 1.7% in the fourth quarter from 2.3% in the third quarter (based 

on GDP by industry measures), suggesting December needs a good showing 

for the fourth quarter to prove as strong as the third quarter. 

     Such readings imply some downside risk to the Bank of Canada's 

growth estimates (GDP by expenditure). 

     The BOC expects real GDP to grow at an above-potential annualized 

pace of 2.5% in the fourth quarter of 2017 and the first quarter of 2018 

before returning close to potential. 

     CIBC analyst Nick Exarhos said in a commentary following 

Wednesday's GDP report that November GDP growth pace "only keeps us in 

the 2% or so range for Q4." 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

[TOPICS: M$C$$$,MACDS$]