Canada’s economy shrank by 0.1 per cent in December and got smaller in three of the previous four months.
Statistics Canada reported Friday that the service sector eked out a 0.2 per cent expansion in December, but that was offset by a 0.7 per cent decline in goods-producing industries.
Manufacturing shrank by 0.7 per cent, its fourth contraction in five months. Construction, meanwhile, shrunk seven months in a row — the first time that has happened in almost three decades.
On the upside, wholesale and retail trade, transportation and warehousing, and the finance and insurance sectors all expanded during the month.
On an annualized basis, December’s numbers mean the economy expanded at a 0.4 per cent pace in the fourth quarter as a whole. That’s a sharp slowdown from the two per cent pace in the previous quarter, and the slowest growth since early 2016.
The weak showing sent the loonie tumbling, down almost three-quarters of a cent to as low as 75.53 cents US at one point.
“It looks like a lot of the weakness can be attributed to softening of the oilpatch,” said Nathan Janzen, senior economist with the Royal Bank of Canada.
For comparison purposes, the U.S. economy grew by 2.6 per cent in the last quarter of 2018.
“If you’re the Bank of Canada, it’s another reason to hold off on raising interest rates for a while,” Janzen said.