Canada October Growth Beat Forecasts

Canada's economy grew more than forecast in October, as manufacturers expanded the most since January 2006 and wholesalers gained for a sixth straight month, while retail sales rose unexpectedly.
Bloomberg 12/21/2007 7:03:48 AM

Gross domestic product advanced 0.2 percent from September, Statistics Canada said today in Ottawa. Economists in a Bloomberg News survey predicted 0.1 percent growth as in the previous month. Separately, retail sales gained 0.1 percent in October to C$34.5 billion ($34.6 billion), the agency said.

Consumer spending has powered growth in the world's eighth-biggest economy in the past few years, as a commodities boom pushes unemployment to three-decade lows. The Bank of Canada cut interest rates on Dec. 4 to spur domestic demand as exports are hampered by a high currency and uncertainty in credit markets.

The Canadian dollar is up 17 percent against its U.S. counterpart this year. The currency rose 0.4 percent to 99.76 Canadian cents per U.S. dollar at 9:28 a.m. in Toronto, from 1.0014 yesterday. Earlier, it touched 99.49 Canadian cents per U.S. dollar, the strongest since Nov. 30.

Even so, manufacturing rose 0.8 percent during the month, rebounding from two consecutive declines, as an increase in foreign demand boosted production of durable goods. Wholesalers gained 1.5 percent, the biggest monthly increase since May.

Mining and oil-and-gas extraction led the October declines, falling 1.5 percent, on ``production difficulties'' in eastern Canada, the report said. Transportation and warehousing companies fell 0.2 percent and agriculture and forestry dropped 0.5 percent after a strike caused shutdowns at sawmills.

Both goods-producing and services-producing sectors rose in October, with goods makers gaining 0.1 percent and services providers advancing 0.3 percent, Statistics Canada said.

Meanwhile, the retail sales gain wasn't forecast by economists, who in a Bloomberg News survey predicted overall sales would drop 0.4 percent, the median of 18 responses.

Excluding automotive-related goods, retail sales stalled in October, as economists anticipated they would.

Sales of new cars rose 1 percent to C$6.46 billion, as consumers bought more minivans, sport-utility vehicles and other trucks. Total retail sales increased 7.3 percent in October from a year earlier, Statistics Canada said.

Canada October Growth Beat Forecasts