MNI DATA IMPACT:Canada GDP Resilient on 0.4% Gains in Oct, Nov

Canada's GDP was surprisingly robust with gains of 0.4% in October and again in a flash estimate for November when local governments began a second round of tougher pandemic restrictions, government figures showed Wednesday.

Manufacturing, wholesale and financial services led growth in November, with some weakness in construction, Statistics Canada said.

For October, the GDP gain exceeded the economist consensus of 0.2% and was broad-based with increases in 16 of 20 major industries.

"The highest level of trading activity of federal government bonds -- along with increased activity in other securities such as the money market and the repo bond market -- contributed to a 2.2% growth in financial investment services and a 0.7% gain in depository credit intermediation and monetary authorities," Statistics Canada's report said.

Services climbed 0.5% in October and goods production by 0.1%. Manufacturing tumbled 0.8% after five previous gains as firms devoted less to stocking inventories.

Gross domestic product is still 4% less than before the pandemic and 3.5% less than a year ago.

Restaurant and bar food services fell 4.5% as colder weather hurt outdoor dining options, the biggest drop outside of the spring lockdown since a recession in 1991.

Things likely will be worse in December and January as Quebec and Ontario essentially banned gatherings for Christmas and other holidays. Industry sources tell MNI the pullback will be less severe than the spring lockdown after adaptations to delivering goods and services.

Retail this year may suffer with official statistics still not providing a full picture of online purchases made through Amazon and other U.S.-based platforms, with Canadian recycling bins on the other hand full of boxes from those dealers.

Most economists see annualized growth of around 3% annualized in the fourth quarter. Bank of Canada Governor Tiff Macklem said Dec. 15 that while there is enough momentum for modest growth this quarter, GDP may post a modest decline in the first quarter of 2021 amid the new Covid wave.

The prospect of business shutdowns leaves the economy again reliant on the government's deficit spending approaching 20% of GDP, one of the world's largest, and Finance Minister Chrystia Freeland's pledge to spend freely until the pandemic passes and to put another CAD100 billion of building back better money out after that.