TORONTO (Bloomberg) — Canada's economy contracted a less- than-anticipated 0.1 percent in October as wholesalers processed fewer shipments of automobiles and factory production dropped.

Wholesaling declined 2.7 percent as automotive sales slipped "significantly" and manufacturing fell 0.7 percent, the third drop in five months, Statistics Canada said last week in Ottawa. Economists surveyed by Bloomberg said gross domestic product would dip 0.3 percent, the median of 19 estimates.

The world's eighth-biggest economy is slowing amid tight credit conditions for businesses, slumping shipments of cars and lumber to the US, Canada's main foreign market, and lower prices for exported commodities such as oil. Gross domestic product will shrink by 0.4 percent next year and generate the country's first budget deficit in more than a decade, Finance Minister Jim Flaherty said last week.

"There is little debate over the economy's inability to decouple itself from the US consumer and the US economic slowdown," Stewart Hall, an economist with HSBC Securities in Toronto. "The expectation is for the economy to decelerate significantly in November and December."

Flaherty, 58, is planning as much as C$25 billion ($20.6 billion) in stimulus in a budget he'll release on January 27, a government official said last week on the condition they not be named. Slower revenue gains and higher spending threaten to end a record 11 straight budget surpluses for the oil-rich country.

The Canadian dollar rose 0.2 percent to C$1.2164 per US dollar on Friday in Toronto.

Construction fell 0.3 percent as homebuilding retreated 1.2 percent. The drop in demand for housing also led to a 14 percent decline for real-estate agents and brokers.

Retailers' output fell 0.1 percent in October.

The financial services industry gained 0.4 percent after "unusually high volumes" of stock trading, Statistics Canada said. Energy production also rose 1.2 percent in October after declining in the previous two months.

Overall, the goods-producing portion of the economy was unchanged while services industries shrank 0.2 percent. October's decline left manufacturers contributing five percent less to GDP than in October 2007, the worst year-over-year performance among industries tracked by the agency.