09:00 AM EST, 12/23/2024 (MT Newswires) -- The Canadian economy appears to have been on a stronger footing than initially expected entering Q4, although early evidence for November suggests momentum has waned again, said CIBC.

October's gross domestic product posted a "healthy" 0.3% month-over-month advance, which was a tick above the consensus and two ticks better than the early estimate for that month, noted the bank following Monday's data release.

In addition, the September growth rate was revised up to 0.2% month over month, from 0.1% initially.

For October, a rebound in mining, oil & natural gas following three monthly declines contributed more than half of the overall growth rate in GDP. There was also further growth in real estate, where activity rose for a sixth successive month.

However, the advance estimate for November GDP suggested a slight give-back, with a 0.1% month-over-month decline projected. That means that, even with the stronger-than-expected October figure, Q4 GDP is still tracking slightly below the Bank of Canada's MPR projection of 1.7% versus 2.0% and is still not growing above its long-run potential -- something that is needed to close the output gap and reduce unemployment, added CIBC.

As such, while there is evidence that interest-rate sensitive areas of the economy -- such as real estate, retail sales -- have already strengthened as the Bank of Canada has lowered rates, further interest rate relief will be needed in the New Year to help close the output gap. The bank continues to see rates needing to dip slightly below neutral, forecasting a low of 2.25% for the overnight rate in 2025.