Canada’s real gross domestic product (GDP) saw a modest increase of 0.2% in December 2024, signaling a recovery after the previous month’s decline. The growth marks the fifth positive change in the last six months. It was driven by services-producing and goods-producing industries, with 11 out of 20 sectors recording positive growth.
One of the standout performers in December was the retail trade sector, which experienced a robust 2.6% increase. This marked its largest growth since June 2021, when restrictions on in-person shopping were eased following the COVID-19 pandemic. The increase was particularly notable across all subsectors, with motor vehicle and parts dealers leading the charge. The sector’s performance was further bolstered by the temporary GST/HST tax break introduced mid-month, which helped fuel higher sales in various goods, especially in food and beverage stores.
Food retailers, in particular, saw a significant uptick, with grocery stores and liquor outlets seeing a 2.9% rise in sales. This contributed to the overall expansion in retail trade, making it a pivotal factor in December’s GDP growth.
Utilities, an often volatile sector, experienced a significant 4.7% rebound in December, more than compensating for a decline in November. This growth was primarily due to an increase in electric power generation, which was aided by better hydroelectric production following improved drought conditions. Additionally, the completion of refurbishment at nuclear power plants contributed to the sector’s overall performance.
Mining, quarrying, and oil and gas extraction also played a central role in December’s GDP growth. The sector increased by 0.8%, largely due to a surge in oil and gas extraction. Notably, oil sands extraction grew by 2.3% as production ramped up, offsetting a contraction in November. The sector’s recovery from earlier setbacks points to a strengthening energy market as Canada moves into the new year.
Despite these gains, the manufacturing sector remained a significant drag on growth, contracting by 0.9%. This marked its sixth decline in seven months, with durable goods manufacturing, including transportation equipment, continuing its downward trend. The transportation equipment sector, particularly, faced a steep 1.1% decline, continuing a rough patch that has affected the industry for much of the year.
Meanwhile, the postal services industry, which suffered from a prolonged strike involving approximately 55,000 workers, saw a dramatic 25.5% drop in activity. The strike, which lasted from mid-November to mid-December, had a substantial impact, although courier and messenger services saw a substantial 7.6% increase as businesses and consumers shifted to alternative carriers during the holiday rush.
Transportation and warehousing showed mixed results in December. The sector edged up by 0.1%, but much of the gain was driven by rebounding rail and water transportation, which had been disrupted earlier in the year by strikes and lockouts. Notably, air transportation rose by 1.0%, continuing its recovery with the resumption of international and domestic travel. However, postal services continued their decline, affecting the broader transportation landscape.
Looking forward to 2025, Canada’s economic trajectory remains cautiously optimistic. Preliminary data for January 2025 shows a 0.3% increase in GDP, with mining, quarrying, and oil and gas extraction leading the charge. However, there are concerns in sectors like retail trade, where initial signs point to a possible slowdown after the holiday season.