Canadian economic growth unexpectedly paused in October as a decline in oil and gas extraction offset gains in the wholesale trade and retail sectors, data from Statistics Canada showed on Friday.

The unchanged reading for gross domestic product was short of economists' forecasts for a gain of 0.2 per cent following September's unrevised 0.2 per cent increase.

Growth in the second half of 2017 is expected to have cooled from the blistering pace set in the first half of the year, though analysts expect improvement in the labor market and inflation will see the Bank of Canada continue to tighten interest rates next year.

"That was disappointing," Brian DePratto, senior economist at TD Economics, wrote in a note to clients. "With nearly all monthly indicators looking healthy, the oil sector threw a wrench in what was otherwise looking like a solid month." 

Activity in goods-producing sectors of the economy declined by 0.4 per cent in October, led by a 1.1 per cent pullback in the mining and oil and gas extraction industry.

It was the fourth decline in the sector in five months as non-conventional oil extraction fell, partly due to a loss of capacity during maintenance. Mining also declined by 0.8 per cent.

But the weakness was tempered by a 1.4 per cent increase in wholesale trade, which was helped by sales of machinery and equipment.

Doug Porter, chief economist at BMO Financial Group, took a festive approach to the last GDP report of the year. In a note to clients, he wrote: "Frosty the GDP report was a jolly lazy soul...With zero growth and a boom not close, And two sectors made out of coal," later noting the softer growth is keeping BMO "semi-comfortable with [their] call of March for the next rate hike." 

The retail sector grew by 1.1 per cent after three consecutive months of declines as consumers bought more new and used cars. Overall, the service sector grew by 0.2 per cent.

"Although [Friday's] GDP figures were the last major release ahead of Christmas and the New Year, the economy didn't give us much reason for good cheer," CIBC Economist Nick Exarhos wrote in a note to clients. 

"Today's results leave us tracking slightly below the Bank of Canada 2.5% forecast for the fourth quarter, which should throw cold water on what had been a pulling forward of expectations for rate hikes following this week's releases."

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-With files from BNN