Economy unexpectedly shrank in November
Canada's economy contracted slightly in November, bringing the annual pace of growth down to two per cent.
On a monthly basis, the economy contracted 0.1 per cent in November, Statistics Canada said Tuesday. That came on the heels of a flat monthly showing in October.
The weak showing overall was below the 0.2 per cent monthly gain that economists were expecting. It was also the first contraction in six months.
"The downside surprise was almost entirely due to one sector — oil and gas extraction fell 2.5 per cent," BMO chief economist Doug Porter said.
Crude oil production fell because of maintenance shutdowns, which presumably will soon be reversed, Porter noted. But lower natural gas output also hurt "and there’s not much hope for a quick turn there," he said.
A glut of natural gas from shale deposits has depressed prices for much of the last year, and that's eating into the output of one of Canada's key industries.
"[It] underscores how much Canada’s economic recovery depended on just one industry. Our petro-economy is now vulnerable to any temporary drop in energy production," United Steelworkers economist Erin Weir said of the data.
Financial services and construction also contracted, but on the positive side, retail trade and manufacturing were both up 0.6 per cent. Weir singled out a boost in durable goods production as being one of the few bright spots.