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November uptick expected to end Canada’s cold streak

‘The now-resolved NHL lockout could continue to weigh on the arts and entertainment component, but the drag on over all growth would likely be minimal,’ says senior economist Benjamin Reitzes of BMO Nesbitt Burns.


Remember November, a couple of months after the release of the iPhone 5 and a time when hockey fans were still suffering from the ice-capades that were the NHL lockout? Both of those events could play a role Thursday when Statistics Canada reports on how the economy performed in November. As could Canada's cooling housing market.

The report is expected to show that economic growth picked up somewhat, with gross domestic product expanding by 0.2 per cent or 0.3 per cent, which would be welcome given the prior string of disappointing results as the economy stagnated.

Economists have examined the indicators that feed into the reading on overall economic growth and determined, as senior economist Benjamin Reitzes of BMO Nesbitt Burns noted, that November's showing could well be the best in four months.

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"Manufacturing, retail and wholesale trade all added to growth, according to preliminary Statscan reports," Mr. Reitzes said in a research note.

"It looks as though the iPhone 5 release (even though it was officially out in September) may have boosted the latter two sectors, as electronics sales jumped for both. The now-resolved NHL lockout could continue to weigh on the arts and entertainment component, but the drag on over all growth would likely be minimal. And we should see a rebound on that front in January and February."

The slower pace of the housing market could prove to be a drag, added Emanuella Enenajor of CIBC World Markets, but we may well see a "more upbeat tempo" given gains in other sectors.

"The month's 2.5-per-cent increase in import volumes points to rising domestic demand, while a hat trick of higher volumes in wholesale, retail and factory output suggests economy-wide activity was a-brewing," Ms. Enanajor said.

"Alberta oil production wasn't entirely in the clear following earlier disruptions, but restarts to East Coast oil production could have also added to growth, while energy output from new oil sands production also likely helped."

Even if November's results come in as expected, and are followed by another humble showing in December, the fourth quarter still isn't expected to be buoyant, with growth at an annual pace somewhere in the area of 1 per cent or slightly more.

Just last week, as it held its benchmark rate steady at 1 per cent, the Bank of Canada trimmed its estimate of economic growth for all of last year to 1.9 per cent. It also cut its outlook for this year to 2 per cent, from an earlier projection of 2.3 per cent.

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