OTTAWA (Reuters) - Canada’s economy racked up the strongest growth since March 2010 in November and solidified expectations for a more robust economic performance in the fourth quarter.
The economy grew 0.4 percent in November due to increased oil and gas extraction as well as higher wholesale and retail prices, Statistics Canada said on Monday.
Analysts polled by Reuters had expected gross domestic product to climb by 0.3 percent after a 0.2 percent gain in October.
Economists said the November figures bode well for fourth-quarter GDP achieving the 2.3 percent growth forecast by the Bank of Canada. The economy grew by 1 percent in the third quarter.
“The Canadian economy looks to have ended 2010 on an upswing after a mid-year lull, churning out its best monthly growth rate since last March,” wrote Doug Porter, deputy chief economist at BMO Capital Markets.
He said, however, that the GDP numbers are unlikely to push the central bank into a quick move to raise interest rates.
“Still, growth is not yet so strong to soon shake the Bank of Canada off the sidelines -- we would need to see a few more months of this kind of strength -- as three- and six-month trends in GDP growth remain a bit below 2 percent.”
Other data released on Monday by Statistics Canada showed producer and raw materials prices topped forecasts in December, lifted by petroleum and metals.
Following the data, the Canadian dollar rose as high as C$0.9963 to its U.S. counterpart, or $1.0037, up from C$0.9985 to the U.S. dollar, or $1.0015, before the figures were released.
The gain in November GDP was broad based, despite declines in construction and manufacturing. Oil and gas extraction rose 2.4 percent from October, due to higher synthetic crude production after maintenance to oil sands upgraders was complete.
Wholesale trade grew by 1.5 percent, while the retail sector rose by 1.4 percent. The finance and insurance sector rose 0.7 percent on higher stock trading volume.
Manufacturing decreased by 0.8 percent as a result of temporary plant shutdowns in vehicle assembly and shift reductions in the motor parts industry. The manufacturing sector has been struggling with the strong Canadian dollar and anemic U.S. demand.
The construction sector contracted 0.4 percent on reduced residential demand, but the home resale market had a 7.6 percent gain.
The industrial product price index for December rose 0.7 percent, topping market forecasts for a 0.6 percent gain and accumulating a 2.9 percent increase on the year.
It was the fifth consecutive month of increases for producer prices, led by a 4 percent gain in petroleum and coal products, Statscan said.
Raw materials prices rose 4.2 percent in December, the largest gain since June, and above estimates for a 4.0 percent gain, on increases in mineral fuels, nonferrous metals and vegetable products. Raw materials prices jumped 13.2 percent from a year earlier but were still 21.8 percent below the peak in July 2008.
Additional reporting by Howaida Sorour; editing by Peter Galloway