Auto strike to blame for shrinking economy in October
December 23, 2019
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Canada’s economy unexpectedly shrank by 0.1 per cent in October, the first monthly decline since February, partly because of a U.S. auto strike that hit manufacturing, Statistics Canada data indicated on Monday.
Analysts in a Reuters poll had forecast a gain of 0.1 per cent following a 0.1 per cent advance in September. Goods-producing industries posted a 0.5 per cent loss while service sectors were essentially unchanged.
October’s growth figures were the latest in a string of disappointing data that analysts say may prompt the Bank of Canada to mull a rate cut. The central bank has held its key rate unchanged since October 2018 even as several of its counterparts, including the U.S. Federal Reserve, have eased.
The manufacturing sector contracted by 1.4 per cent, the fourth decline in five months. Durable manufacturing dropped by 2.3 per cent as a strike by the United Auto Workers prompted some Canadian plants and parts producers to scale back production.
Retail trade fell by 1.1 per cent, the largest decline since March 2016, on broad-based weakness. Transportation and warehousing rose by 0.6 per cent on strength in the aviation sector, both in passengers and cargo.