Skip to content

The Monitor Progressive news, views and ideas

GDP Turns Negative

January 31, 2012

0-minute read

Statistics Canada reported today that the economy shrank in November for the first time in six months.

This decline was driven by reduced energy production, which partly reflected maintenance shutdowns in the oil patch and unusually mild weather. While those factors may not affect future economic growth, their ability to turn it negative in November underscores how much Canada’s economic recovery depended on just one industry. Our petro-economy is now vulnerable to any temporary drop in energy production.

A bright spot in today’s report is the pickup in durable-goods manufacturing. For a third consecutive month, manufacturing output accelerated.

It remains unclear whether this nascent manufacturing recovery will translate into jobs. Manufacturing employment decreased in all three of those months, but bounced back in December.

November was the third consecutive month in which Canada’s overall economic growth rate decreased. The revelation that we fell into negative territory should prompt governments to rethink planned budget cuts. Sharply reducing public investment could push our fragile economy back into recession.

Erin Weir is an economist with the United Steelworkers union and a CCPA research associate.

UPDATE (January 31): Interviewed on the Business News Network

UPDATE (February 1): Quoted by the Canadian Press

Topics addressed in this article

Related Articles

Canada’s fight against inflation: Bank of Canada could induce a recession

History tells us that the Bank of Canada has a 0% success rate in fighting inflation by quickly raising interest rates. If a pilot told me that they’d only ever attempted a particular landing three times in the past 60 years with a 0% success rate, that’s not a plane I’d want to be on. Unfortunately, that looks likes the plane all Canadians are on now.

Non-viable businesses need an"off-ramp"

Throughout the pandemic, many small- and medium-sized businesses have weathered the storm, thanks to federal government help. In his deputation to Canada's federal Industry Committee, David Macdonald says it's time to give those businesses an "off-ramp".

Truth bomb: Corporate sector winning the economic recovery lottery; workers falling behind

This isn’t a workers’ wage-led recovery; in fact, inflation is eating into workers’ wages, diminishing their ability to recover from the pandemic recession. Corporate profits are capturing more economic growth than in any previous recession recovery period over the past 50 years.

Show your support

Since the beginning of the pandemic, our writers and researchers have provided groundbreaking commentary and analysis that has shaped Canada's response to COVID-19. We've fought for better supports for workers affected by pandemic closures, safer working conditions on the frontline, and more. With the launch of the new Monitor site, we're working harder than ever to share even more progressive news, views and ideas for Canada's road to recovery. Help us grow.

Support the Monitor