(Bloomberg) -- Canada's economy is flirting with a rare back-to-back monthly contraction in output, something that hasn't happened in nearly four years.
Statistics Canada will release November gross domestic product figures on Friday morning, which will provide the latest reading on what is expected to be a particularly weak quarter. Only one of 17 economists surveyed this week by Bloomberg predicted any growth. The median forecast calls for a flat reading.
Payroll numbers released Thursday that show a decline in hours worked are only reinforcing expectations for a weak reading. Yearly growth in payroll employment is now at its slowest since early 2017.
The latest numbers are “consistent with the fact that we probably had zero, or basically no growth, in November,” Brian DePratto, senior economist at Toronto-Dominion Bank, said by phone. “This gives you a sense that there is maybe a little bit of downside risk.”
A poor showing in November, when the economy was hampered by a major rail strike and pipeline disruptions, would follow a weak reading for October, when GDP unexpectedly dropped 0.1%. The last time the nation recorded two straight monthly declines in output was at the start of 2016.
A larger-than-expected slowdown will only fuel expectations the Bank of Canada will cut interest rates to alleviate the weakness. Policy makers forecast last week that growth would stall in the fourth quarter.
Canada's end-of-year softness is even more pronounced in comparison to its largest trading partner. The U.S. economy produced another solid run of growth in the fourth quarter, according to Commerce Department data released Thursday.
A week-long labor strike at Canada's largest railway, as well as pipeline disruptions, probably stunted growth in November.
While the Canadian economy ended 2019 on a sour note, U.S. ratification of the new North American free trade agreement and a phase-one deal with China have many economists predicting a pick-up in the first half of 2020. But the sudden outbreak of coronavirus puts those forecasts in doubt.
To contact the reporters on this story: Shelly Hagan in ottawa at shagan9@bloomberg.net;Erik Hertzberg in Ottawa at eschmitzhert@bloomberg.net
To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary
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