Canadian GDP came in slightly below market expectations in November, up just 0.2%.

“In this climate of economic weakness, it’s hard to term a 0.2% monthly GDP gain a ‘disappointment’,” says CIBC World Markets.

“Nonetheless, Canada’s economy failed to live up to expectations in November, with a sub-consensus growth tally and a downward revision to an already huge September setback throwing the prospect of positive fourth quarter growth into doubt. Indeed, it will take a very solid December result to deliver the economy from contraction in Q4, and existing evidence isn’t all that comforting—recall that employment dove 18,000 in the final month of the year.”

November growth would have been much more robust had it not been for a surprise disappointment in the manufacturing sector, says CIBC. “Factory output was off 0.1%, a significant departure from the earlier-reported surge in shipments and the absence of an offsetting drop in inventories. After retreating in five of the past six months, the year-over-year decline in manufacturing GDP stands at fully 7%.” Weak energy prices also weighed on the number. Retailing and wholesaling were both strong.

“The mildly disappointing result does not detract from the broader picture of an economy slowly turning the corner toward recovery,” says BMO Nesbitt Burns. “It still appears likely that GDP for all of Q4 was about flat or even slightly positive, similar to yesterday’s reading for U.S. GDP in the quarter.”

RBC Financial Group economists point out that there were some encouraging signs that the travel and tourism industry is gaining some of the ground lost following September 11. “More work needs to be done on the inventory front and is likely to keep Canadian economic performance below that of the U.S. in the first half of this year, but, today’s GDP report adds to the body of evidence that the Canadian economy squeaked out a positive quarter of real GDP growth in the final quarter of 2001.”

BMO declares that Canadian GDP is in the process of recovery. “However, as today’s report shows, there are still a number of important obstacles to a full-fledged return to solid growth.”

“Fourth quarter GDP isn’t out of the woods just yet,” cautions CIBC. A downward revision to September means Q4 started from a lower base, while the softer-than-expected November figure left a lot of work to do in December. No matter which side Q4 growth comes down on, Canada looks to lag the coming upturn in US output.” It estimates that Canada’s first half growth of 1% should prove to be only half as fast as the pace set stateside.