Canada's GDP unchanged in October, Statistics Canada says

Canada's gross domestic product was essentially unchanged in October, Statistics Canada says, as a slight increase in the service sector was offset by a small contraction in goods-producing industries.

Retail and manufacturing were among the sectors that grew. Just about everything else, however, contracted during the month.

Mining, oil and gas, agriculture and forestry, finance and insurance, construction and utilities all contracted during the month.

Economists had been projecting growth of 0.2 per cent for October, which would have matched the expansion seen in September.

Coming on the heels of a strong inflation report on Thursday, the GDP number will take away some of the incentive for the Bank of Canada to hike its interest rate, Bank of Montreal economist Doug Porter said.

"Following yesterday's surprisingly upbeat pair of reports for retail sales and inflation, today's even more surprising stall in October GDP is a comedown," he said in a note to clients.

In the wake of the flat October reading, Porter said BMO has shaved its forecast for fourth-quarter economic growth to an annualized rate of two per cent from its previous prediction of 2.5 per cent.

Toronto-Dominion Bank economist Brian DePratto agrees that the weak GDP number takes away some of the rationale for a Bank of Canada rate hike in the short term.

"While there remains cause for optimism as several one-off factors reverse, there does appear to be less momentum heading into the fourth quarter than both we, and the Bank of Canada were expecting," DePratto said.

Compared to October of last year, the economy grew by 3.4 per cent.