Statistics Canada (StatsCan) reported that Canada’s economy expanded for a second straight month in October. The economy has struggled for traction over much of 2024 due to tight financial conditions, which weighed on consumer and business activity. In response, the Bank of Canada (BoC) has aggressively loosened monetary policy, with five straight rate cuts, including the last two at 50 basis points.

• Canada’s gross domestic product expanded by 0.3% in October over the previous month. This follows a 0.2% increase in September, which was also what economists had expected for October, according to a Bloomberg survey. However, the news wasn’t all good. StatsCan estimated a 0.1% contraction in November.
• In October, a rise in Canada’s goods-producing industry contributed to growth. A rise in oil and gas extraction was particularly notable. Manufacturing activity also positively contributed to growth over the month. Retail trade was unchanged in October over the previous month.
• In a separate report, data from StatsCan showed higher price pressures persist. Producer prices in Canada rose by 0.6% in November, the second straight increase after rising by 1.2% in October. Higher prices for energy products and motorized vehicles drove November’s increase.
• Canadian consumer confidence is waning. The Bloomberg Nanos Canadian Confidence Index fell for an eighth straight week over the week ended December 20. Canadians have expressed concern about the economy, particularly with the threat of tariffs on the horizon.

The BoC hopes its rate cuts will help improve consumer and business activity. However, rate cuts do take a bit of time to filter through the economy and have their desired impact. While there is some optimism about the future health of Canada’s economy, consumer confidence readings show signs that Canadian households are concerned about the potential impact from higher rates in the US, geopolitical tensions and tariffs.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.