Canadian economy inched forward in November

Canadian economic growth crept upwards in November by 0.3% — the first sign of life in the monthly data since August, when there was a razor-thin increase of 0.1%.

Statistics Canada’s latest reading for real gross domestic product followed zero growth in October and a contraction of 0.5% in September.

Read: Snapshot: Canadian economic data

The federal agency said Friday that November’s GDP growth was mostly due to increased activity in retail and wholesale trade, energy extraction and manufacturing.

Wholesale trade bounced back to expand 1.3% in November after shrinking for four straight months, the report said.

Growth in retail trade increased 1.2% following an October contraction of 0.2%, while manufacturing saw an increase of 0.4% after falling for two consecutive months, Statistics Canada said.

“We needed a rebound in Canada just to keep Q4 from being the third negative quarter for the year, and the 0.3% gain was if anything a bit disappointing,” writes CIBC economist Avery Shenfeld in a note to analysts. “The anticipated strength showed up in retailing and wholesaling, but real factory GDP didn’t quite live up to the earlier real shipments data, and outside wholesale/retail, services were weak, on a drop in public admin and finance/real estate. With the softness in September and October data, the November bounce leaves Q4 headed for a growth rate only marginally above zero.”

Read: As oil prices drop, so does Russia’s GDP

Overall natural resources extraction rose 0.6% in November, the report said. Oil and gas extraction increased 2.1% to help offset the weight of the mining and quarrying component, which declined 2.3%.

Downward pressure on GDP — a broad measure of the economy — also came from the finance and insurance sector, which contracted 0.3% for its fourth straight monthly decline.

The GDP reading was released as Canada limps through the net negative effects of a commodity price shock that began in late 2014 and has lingered since.

Read: The ins and outs of global macro

The figure tees up a potentially weak GDP number for the fourth quarter amid downgraded expectations for the final three months of 2015.

The Bank of Canada recently lowered its GDP forecast for the fourth quarter to 0.3%, down from 0.7%. Earlier this month, the central bank also decreased its GDP prediction for the first quarter of 2016 to 0.8% and for the second quarter to 1.4%.

Canada’s economy fell into the technical definition of a recession in the first half of 2015 when GDP fell for two straight quarters. It decreased at an annual pace of 0.7% over the first three months of 2015 and again by 0.3% in the second quarter.

In the third quarter, however, GDP rebounded by generating 2.3% growth.