Canadian Growth Steady Through November

Canadian Gross Domestic Product (NOV)

Actual: 0.1%
Expected: 0.1%
Previous: 0.2%

Growth in the world's eight largest economy cooled slightly from October to November, though the monthly gauge put in for its 14th consecutive positive reading. The Canadian economy expanded 0.1 percent over the month of November, meeting expectations and slowing from the 0.2 percent pickup from the previous period. It was clear from a perfunctory look at the immediate breakdown that the consumer is starting to saddle the burden of growth while the former engines of growth - commodity producers and exporters - suffer. For domestic consumption trends, the retail sector doubled October's improvement by rising 0.4 percent. Housing trends were still stable through November as construction activity rose 0.1 percent. Perhaps more surprising was the 0.2 percent increase in the finance component given the uncertainty in credit markets and a sharp increase in stock volatility. Alternatively, those sectors that are heavily dependant on exports clearly showed a vulnerability to the record high Canadian dollar over the same period. Industiral production contracted for a fifth consecutive month by 0.2 percent. At the same time, manufacturing dropped 0.3 percent. The clear divergence between the country's various sectors reveals the faults in the Canadian economy. Exporters are expected to have suffered worse in more recent months as a sturbbornly expensive Canadian dollar and fading foreign demand through slowing growth trends offsets high commodity prices. It now just seems a matter of time before the Canadian consumer catches up to the US. Bank of Canada Governor David Dodge said in his last press conference that the nation may soon feel the effects of the US slowdown.

In the minutes after the growth numbers crossed the wires, the Canadian dollar dropped 50 points against its US counterpart.

DailyFX

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