Gross Domestic Product (GDP) grew 0.2% in October following a flat performance in September. Strength in the goods producing sector was concentrated in manufacturing, notably the production of motor vehicles. Output in the mining, oil and gas extraction sector decreased after a strong showing in September. Growth in the service sector was stimulated by both retail and wholesale trade, particularly as new motor vehicle sales gained momentum. A strike by British Columbia teachers however hampered growth in the service sector.

Industrial production (the output of Canada's factories, mines and utilities) expanded by 0.4% in October on the strength of manufacturing (+1.0%) while the mining, oil and gas sector (-0.9%) and utilities (-1.2%) partially offset this increase. In the United States, after a drop of 1.6% in September, the index of industrial production grew 1.3% in October, pushed up by manufacturing output while utilities and mining receded.

Manufacturing regains ground on the strength of motor vehicles

Manufacturing output grew 1.0%. Production increased in 14 of the 21 major groups, accounting for 72% of this sector's output. The largest increases were recorded by manufacturers of transportation equipment (+3.7%), machinery (+3.8%), chemicals (+1.5%) and furniture and related products (+3.4%).

The production of auto and light motor vehicles as well as that of heavy-duty trucks bounced back, leading to a 9.4% increase in the output of motor vehicles, but output of motor vehicle parts declined 1.9%. These gains were attributable to a boost in production of 2006 models in some plants, coupled with the fact that Canada is currently home to the assembly of several popular makes of cars and light trucks in North America.

Manufacturers of chemical products raised their output to satisfy demand in the United States where supply is tight. Among other manufacturing goods, food (-2.4%) and sawmills products (-2.8%) recorded the largest declines.

Rebound in auto sales drives up retail and wholesale results

After two consecutive monthly declines, new motor vehicle dealers' sales increased sharply in October. Despite “employee pricing” and other incentive programs, the number of vehicles sold declined in both August and September but picked up some lost ground in October. The retail trade sector grew 0.9% partially on that strength, as retailing activities excluding motor vehicles rose 0.5% with the largest gains recorded by service stations, and beer, wine and liquor stores.

Wholesale trade activity increased 1.0% in October. For a third consecutive month wholesalers of motor vehicles contributed to this strength. Other wholesaling activities however also played a key role. Excluding motor vehicles and parts, wholesale trade grew 0.8% mostly from sales of machinery, computer and other electronic equipment and household and personal products. Wholesalers of farm products increased their output significantly for a third consecutive month with the re-opening of the U.S. border to Canadian livestock.

Construction activity rises on the strength of engineering construction

Construction activity edged up 0.5% due to continued strength in non-residential building construction (+1.0%) and a rebound in engineering, repairs and other construction activities (+1.6%). There was growth in all types of non-residential buildings (commercial, institutional and industrial).

Residential construction decreased 1.2%, marking a third consecutive monthly decline. Housing starts declined substantially in all urban areas except in the Atlantic region. Sales of existing homes decreased significantly in most major metropolitan areas, reducing the output of real estate agents and brokers (-0.1%) and contributing to the limited growth in activities of lawyers and accountants (+0.1%).

The value of building permits, which provides an early indication of building activity, increased in October, fuelled by an on-going gain in the residential sector. The value of permits for non-residential buildings however edged down due to a decline for commercial structures that more than offset the gains posted for industrial and institutional permits.

Mining and energy sectors drop slightly

The energy sector edged down in October (-0.3%). The decline in output was driven by lower oil and gas exploration (-2.7%) as well as by warm weather conditions in October which contributed to reduce the generation of electricity (-1.2%) and the distribution of natural gas (-2.8%).

Oil and gas extraction, however, rose 0.6%. The growth in output of crude petroleum was partially offset by a decline in natural gas. The return to full capacity production on the East Coast after maintenance work as well as robust growth in the tar sands area contributed to that increase.

Mining activity, however, declined markedly (-5.6%). Output of base metals dropped 8.4%, partly as a result of strike activities. Non-metallic minerals mines (which include diamonds and potash) also contributed to this drop with a 7.5% decline.

Other activities

The transportation and warehousing sector retreated 0.3% on the weakness of most types of transportation activities. Air and ground passenger transportation contributed the most to that decline, decreasing 1.3% and 1.5%, respectively. Pipeline transportation partially offset the general decline as the transportation of crude oil and natural gas grew in October. Warehousing and storage activities also declined 1.7%, as warehousing of farm products fell markedly.

A strike by British Columbia teachers contributed to the 1.7% decrease in output of educational