By Paul Vieira

OTTAWA -- The Canadian economy rebounded in November, more than offsetting a surprise decline in the previous month, on the strength of manufacturing and resource development.

Canada's gross domestic product, the broadest measure of goods and services produced in an economy, climbed 0.4% in November from the previous month, to 1.69 trillion Canadian dollars (about $1.29 trillion), Statistics Canada said Tuesday. Market expectations were for a 0.3% month-over-month gain, according to economists at Royal Bank of Canada.

On a year-over-year basis, GDP advanced 1.6% in November.

The previous month's data were also revised, and now suggest GDP declined 0.2% in October versus the earlier estimate of a 0.3%drop.

CIBC World Markets said the consensus-beating figures, combined with the October revision, should have annualized growth in the fourth quarter tracking close to 2%. "That should remove further the possibility of a near-term ease from the Bank of Canada, despite its continuing dovish bias.

This month, the Bank of Canada slightly boosted its expectations for growth in 2016 and 2017, to 1.3% and 2.1%, respectively. But the central bank left its benchmark policy rate unchanged -- and left open the option of further easing amid uncertainty over U.S. and global trade policies -- as the economy continues to dig itself out from an income shock fueled by lower commodity prices.

In its Jan. 18 rate decision, the Bank of Canada said the economy is adjusting to past declines in commodity prices but continues to face uncertainty at the global level and in the U.S. in particular. Activity in Canada's hard-hit resource sector appears tohave bottomed out, the central bank said, while jobs and business investment are being reallocated to other parts of the economy, including the service sector.

November's GDP report suggests the manufacturing sector did much of the heavy lifting in the month. After recording a 1.7% decline in October, production at Canadian factories climbed 1.4% in November, or the best showing in five months. On a year-over-year basis, manufacturing output rose 0.6%.

Meanwhile, mining and energy extraction expanded 1.4%. The data agency said the gain was attributed to activity in the Alberta oil sands, or nonconventional oil extraction, and iron ore and potash.

Over all, goods-producing industries climbed 0.9% in November month over month.

The services sector rose 0.2% in the month. The finance and insurance component surged 1.5%, or the best one-month performance in nearly two years. Retail trade also climbed at a robust 0.7% pace inmonth. These performances were offset by declines by wholesalers and the real-estate sector.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

January 31, 2017 09:28 ET (14:28 GMT)

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