Canada's economy looks set to end 2010 on an upbeat note, with November's gross domestic product growing at its fastest pace since March and beating economists' forecasts.
The economy expanded 0.4% in November. That's double the rate of growth in October, Statistics Canada said.
Economists had predicted GDP would expand by 0.3%. Most sectors of the economy performed well, including oil and gas, wholesale and retail trade, and finance. The only real drags in the month were construction and manufacturing, according to StatsCan.
"The solid November gain puts GDP for all of Q4 handily on track for the Bank of Canada's latest call of 2.3% for the quarter," said BMO deputy chief economist Doug Porter. "It also sets the economy up well to outperform their expectation of a 2.5% advance for Q1."
BMO expects the economy to expand 3.4% in the first quarter, while RBC Economics estimates a 3.7% gain.
The figures show the economy is picking up steam after a lull in the middle 2010 as activity in the real-estate market slowed to a crawl, and a strong dollar, coupled with weak external demand, hit exports.
Surveys have also shown consumer confidence has begun to improve, helped by signs the recovery south of the border is gaining traction.
That said, Monday's figures are unlikely to be enough to sway the central bank into raising interest rates any time soon, especially given ongoing headwinds facing the manufacturing sector, economists said.
"The outlook for the Canadian economy is consistent with the Bank of Canada on hold until July of this year, with only gradual rate hikes thereafter," said TD Bank Financial Group economist Diana Petramala.
Oil-and-gas extraction led November's expansion, rising by 2.4%, StatsCan said. The gains came mainly from higher synthetic crude-petroleum production after the completion of maintenance upgrades.
Wholesale trade rose 1.5% on a wide range of products, including machinery and equipment, farm products and materials, and food and beverages.
Retail trade advanced 1.4% in November after a slight decline the month before. It was the second largest monthly increase in 2010, after the 2.1% gain in March.
The finance and insurance sector rose 0.7%. There were increases in the volume of trading on the stock exchanges in personal lending and in mortgages. The sales of mutual funds declined.
Manufacturing activity declined 0.8% in the month, but StatsCan said the dip was mainly due to temporary plant shutdowns for retooling in the motor-vehicle assembly industry and shift reductions in the motor-vehicle parts industry.
The real-estate industry also improved in the month, with the output of real-estate agents and brokers gaining 7.6%. It was the fourth consecutive gain for the real-estate industry, though the level of output is still below the 8% recorded in April last year, StatsCan said.
