Canadian GDP gained 0.1% in November, meeting economists’ expectations. “While there isn’t much news in today’s GDP report it does highlight three trends: Canadian growth has slowed considerably in recent months, but it remains fundamentally healthy, and is still above the U.S. pace,” says BMO.

“November certainly lived up to its advance billing as a stagnant month for the Canadian economy,” says CIBC World Markets. But TD Bank is more upbeat. “While the reported headline gain is unlikely to turn any heads, today’s GDP report should provide reassurance that Canada’s economy remains a rock amid a sea of global uncertainty and war fears. November’s GDP increase still leaves the economy on track to record growth of about 2.0% in the fourth quarter. That pace is hardly anything to sneeze at, given the fact that other G-7 countries – notably the U.S. – were struggling to post any growth at all in late 2002.”

BMO Nesbitt Burns says the growth was evenly balanced between services and goods-producing industries. Manufacturing managed to claw out a small 0.1% increase in the month, and now stands 5.7% above year-ago levels. Services output was held back by a 1.1% drop in retail trade in the month. However, this was largely offset by ongoing strength in wholesale trade, administrative services, communications, and arts & recreation, says BMO, calling for a 2.5% gain in the fourth quarter.

RBC Financial Group economists say that the numbers put the fourth quarter in the 2.5% to 3.0% range. “Early indicators for December, such as vehicle sales, suggest that the retail industry will do much better next month while the hydro related problems that kept electricity generation weak in November are likely to be partly reversed in December. More worrisome to some is the outlook for the manufacturing sector where output remained relatively static in November, rising by only 0.1%. The good news for this sector is that economic activity is set to rise in the first quarter of next year in the U.S. ushering in a period of more vigorous recovery for the remainder of the year,” says RBC.

CIBC foresees 2.4% growth for the fourth quarter, the worst performance in a year. “The mystery continues to be why there has been so much job creation over that period, even after allowing for the poor quality of the employment gains. Something has to give, and if it’s the jobs pace, there won’t be quite as much confidence about a rebound in domestic demand growth in 2003.”

“And, while these results will hardly send the message to the Bank of Canada that interest-hikes are urgently required,” says TD, “we stick to our view that by the March, the Bank will start the next wave of gradual monetary tightening in Canada in order to ensure that core inflation stays close to its 2% target down the road. In any event, a likely firming in the U.S. economy by mid-year should set the stage for a return to more rapid real GDP growth in Canada during the second half of 2003.”