WRAPUP 2-Canada’s economy picks up speed in November

* November growth exceeds expectations at 0.4 percent

* Data points to Q4 growth of at least 3.5 pct

* December producer prices pulled lower by oil, C$

* Jobs data revisions show slightly worse Q4
(Adds revised employment figures)

By Louise Egan

OTTAWA, Jan 29 (BestGrowthStock) – Canada’s economic recovery
picked up speed in November and stronger-than-expected growth
fueled expectations of a frothy fourth quarter, although likely
still below that reported in the United States on Friday.

Statistics Canada said gross domestic product advanced 0.4
percent in the month, beating market expectations for 0.2
percent growth, on strength in wholesale trade as well as oil
and gas extraction.

On a year-over-year basis, GDP shrank by 1.7 percent.

“This is one of the most convincing signs so far that the
Canadian recovery is for real,” said Doug Porter, deputy chief
economist at BMO Capital Markets.

Even if December GDP is flat, which is unlikely, the
economy is on track to grow by over 3.5 percent in the fourth
quarter, Porter said.

“Suddenly, the Bank of Canada’s fourth-quarter growth
estimate of 3.3 percent looks positively modest,” he said.

The Canadian dollar climbed against the U.S. dollar after
the data was released. By mid-morning, the Canadian dollar was
at C$1.0630 to the U.S. dollar, or 94.07 U.S. cents, up from
about C$1.0676 or 93.67 cents before the data

Statscan also said producer prices and raw materials both
fell unexpectedly in December, erasing some of the strong price
pressures seen in the previous month.

The new numbers came as Statscan revised its historical
employment data, revealing the economy created slightly fewer
jobs in the fourth quarter than previously reported, although
the unemployment rate was also lower.

The revisions to the labor force survey data showed
employers shed 28,300 workers in December, not 2,600 as
initially reported, said Jeannine Usalcas, an analyst at the
labor division unit of the federal agency.

But the unemployment rate is now reported at 8.4 percent
throughout the quarter. Statscan originally reported an 8.5
percent jobless rate for December and November and 8.6 percent
for October.

The net result of changes to the three month period from
October-December was about 12,600 fewer jobs created — not
considered a significant number.

The federal agency revised all of its historical data using
a new seasonal adjustment method that replaces the one used
since 1980.

SENTIMENT IMPROVES

Economists had taken the December job losses as
confirmation the recovery would be sluggish but the GDP data
appeared to have lifted investors’ mood somewhat.

After disappointing third-quarter annualized growth of just
0.4 percent, the Bank of Canada predicted this month that the
recovery would gain momentum in the fourth quarter and growth
would peak in the second quarter at 4.3 percent growth.

If the United States is any barometer — Canada relies on
its neighbor to buy three-quarters of its exports — those
estimates should not be far off.

The U.S. economy grew at a 5.7 percent pace in the fourth
quarter, the quickest in more than six years.

In November, goods-producing industries grew 0.6 percent
even as the heavyweight manufacturing sector stagnated. Mining
and oil and gas extraction led the gains with a 1.8 percent
jump, followed by construction with a 1.1 percent rise.

The services industry, which had been more resilient during
the recession, advanced 0.4 percent in November. Wholesale
trade jumped 2.4 percent on strength across all major trade
groups, Statscan said.

Meanwhile, the producer price index showed lesser
inflationary pressures in December. Lower oil prices and a
strengthening Canadian dollar knocked producer prices down by
0.1 percent in December. Raw materials prices fell 1.7
percent.

Stocks

(Reporting by Louise Egan; editing by Rob Wilson)

WRAPUP 2-Canada’s economy picks up speed in November