Canada's Economy Shrinks Most Since 2003

Canada's economy contracted in November by the most since the 2003 power outage, led by slumping production in the manufacturing and construction industries., Bloomberg 2/1/2009 8:50:45 AM

Gross domestic product fell 0.7 percent, its second straight decline and the biggest drop since August 2003 when most of northeastern North America was hit by a power blackout, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg said output would fall 0.4 percent, the median of 21 estimates.

The world's eighth-biggest economy is shrinking amid tight credit conditions for businesses, slumping shipments of cars and lumber to the U.S. and lower prices for exported commodities such as oil. Gross domestic product will fall by 1.2 percent during 2009, the Bank of Canada said on Jan. 20.

Canadian Prime Minister Stephen Harper earlier this week announced C$84.9 billion ($68.8 billion) in deficits over the next five years in a bid to stimulate growth with tax cuts and spending. The measures will boost the nation's gross domestic product by 1.4 percentage points by the end of 2010, the government estimates.

The drop in November output was broad-based, with only the public sector and agriculture and forestry recording gains among the country's 10 largest industries, Statistics Canada said. Manufacturing fell 2.1 percent, construction was down 1.2 percent and utilities slid 1.1 percent, the agency said.

The country's largest industry -- finance, insurance and real estate -- posted a 0.3 percent drop in output.

Canada's economy was 0.8 percent smaller in November than it was a year earlier, the agency said, the largest year-over-year decline in output since August 1991.