The Canadian economy expanded by 0.2% in both October and November. The strength in the services industries more than offset a decrease in goods production. Growth was concentrated in retail trade, notably from vigorous sales of new motor vehicles, as well as in construction activities, and in tourism-related industries. Despite sporadic strikes by Quebec teachers, educational services also contributed to the growth as British Columbia teachers resumed work after walking out in October. Wholesalers and manufacturers of motor vehicles, forestry and electric generation contributed to offset part of the gains.

Industrial production (the output of Canada's factories, mines and utilities) retreated by 0.2% in November. The strength in the mining, oil and gas sector (+0.4%) was more than offset by declines in manufacturing (-0.3%) and utilities (-0.6%). In the United States, industrial production grew 0.8%, pushed up by manufacturing, utilities and mining.

Strength in auto retailers largely offset by weakness in wholesale of motor vehicles

For a second consecutive month, new motor vehicle dealers' sales increased sharply in November. The retail trade sector grew 1.3% largely on that strength, as retailing activities excluding motor vehicles rose 0.6% with the largest gains recorded by clothing stores, and home and hardware centres.

Following three consecutive months of growth, wholesale trade fell 1.0% in November, pulled down by a sharp drop in wholesaling of motor vehicles. Wholesalers of computers and other electronic equipment and of farm products also recorded significant declines. Excluding motor vehicles and parts, wholesale trade edged up 0.1% mostly from sales of household and personal goods, building supplies, and machinery and equipment.

Engineering works continue to stimulate construction activity

Construction activity rose 0.7% in November. Non-residential building construction (+0.5%) and engineering, repairs and other construction activities (+1.0%) continued to be the source of growth in that sector. All types of non-residential buildings (commercial, institutional and industrial) grew.

Residential construction gained 0.2%, after slipping for three consecutive months. Housing starts in urban areas regained momentum except in the Atlantic region. Sales of existing homes increased markedly in most major metropolitan areas, except in Montreal and Vancouver, helping real estate agents and brokers to raise their output 0.2%.

Energy sector edged down while mining recovered

The energy sector edged down 0.2% in November. The decline in output was driven by the generation of electricity (-0.9%) and lower oil and gas exploration (-0.2%) as milder weather conditions were recorded in November.

Oil and gas extraction rose 0.1%. The growth in crude petroleum was offset by a decline in output of natural gas. Crude oil extraction on the East Coast fully recovered after maintenance work in September. As well, increased production in the tar sands area led to higher exports of crude oil.

Mining activity gained 2.8% from its sharp October decline. An 8.5% rebound in output of non-metallic minerals (which include diamonds and potash) in November more than offset the declines in iron and other metal ore mines.

Manufacturing loses some ground on the volatility of motor vehicles

Manufacturing output declined 0.3% in November. Production decreased in 9 of the 21 major groups, but among them were some of the largest, accounting for 46% of this sector's output. The largest declines were recorded by manufacturers of transportation equipment (-3.2%), chemicals (-2.6%), paper (-1.1%), and beverage and tobacco products (-1.7%).

Recent swings in consumer purchases of motor vehicles have made 2005 motor vehicle manufacturing volatile. Following strong gains in October, the production of auto and light motor vehicles as well as that of heavy-duty trucks fell markedly in November, resulting in a 5.0% decline in output of motor vehicles. The output of motor vehicle parts weakened 3.7%, a third consecutive monthly decline. With gasoline and fuel oil prices diving from record levels and American refineries along the coast of the Golf of Mexico coming back online following extensive production disruptions caused by the hurricane season, Canadian refineries reduced their output. Furthermore, driven by pharmaceuticals and resin and synthetic fibres, the output of chemical manufacturers also retreated in November.

Gains in food manufacturing (+2.6%), plastic products (+2.3%), sawmills (+1.8%), veneer products (+4.5%) and clothing (+5.8%) contributed to limit the decline in output of the sector.

Other activities

Some tourism-related industries fared well in November. Air transportation increased by 3.6% while accommodation services gained 2.8% and food and beverage services rose 1.2%. The number of tourists travelling to Canada increased 1.0% in November.

Despite some sporadic strike activities by Quebec teachers, the end of a strike by British Columbia teachers contributed to the rebound of 2.0% in output of educational services in November. Strike activities by professional union members in Quebec contributed however to the 0.5% decline in the output of the provincial administration.