* November growth exceeds expectations at 0.4 percent
* Data points to Q4 growth of at least 3.5 pct
* December producer prices pulled lower by oil, C$
* Jobs data revisions show slightly worse Q4 (Adds revised employment figures)
By Louise Egan
OTTAWA, Jan 29 (Reuters) - Canada's economic recovery picked up speed in November and stronger-than-expected growth fueled expectations of a frothy fourth quarter, although likely still below that reported in the United States on Friday.
Statistics Canada said gross domestic product advanced 0.4 percent in the month, beating market expectations for 0.2 percent growth, on strength in wholesale trade as well as oil and gas extraction.
On a year-over-year basis, GDP shrank by 1.7 percent.
"This is one of the most convincing signs so far that the Canadian recovery is for real," said Doug Porter, deputy chief economist at BMO Capital Markets.
Even if December GDP is flat, which is unlikely, the economy is on track to grow by over 3.5 percent in the fourth quarter, Porter said.
"Suddenly, the Bank of Canada's fourth-quarter growth estimate of 3.3 percent looks positively modest," he said.
The Canadian dollar climbed against the U.S. dollar after the data was released. By mid-morning, the Canadian dollar was at C$1.0630 to the U.S. dollar, or 94.07 U.S. cents, up from about C$1.0676 or 93.67 cents before the data
Statscan also said producer prices and raw materials both fell unexpectedly in December, erasing some of the strong price pressures seen in the previous month.
The new numbers came as Statscan revised its historical employment data, revealing the economy created slightly fewer jobs in the fourth quarter than previously reported, although the unemployment rate was also lower.
The revisions to the labor force survey data showed employers shed 28,300 workers in December, not 2,600 as initially reported, said Jeannine Usalcas, an analyst at the labor division unit of the federal agency.
But the unemployment rate is now reported at 8.4 percent throughout the quarter. Statscan originally reported an 8.5 percent jobless rate for December and November and 8.6 percent for October.
The net result of changes to the three month period from October-December was about 12,600 fewer jobs created -- not considered a significant number.
The federal agency revised all of its historical data using a new seasonal adjustment method that replaces the one used since 1980.
SENTIMENT IMPROVES
Economists had taken the December job losses as confirmation the recovery would be sluggish but the GDP data appeared to have lifted investors' mood somewhat.
After disappointing third-quarter annualized growth of just 0.4 percent, the Bank of Canada predicted this month that the recovery would gain momentum in the fourth quarter and growth would peak in the second quarter at 4.3 percent growth.
If the United States is any barometer -- Canada relies on its neighbor to buy three-quarters of its exports -- those estimates should not be far off.
The U.S. economy grew at a 5.7 percent pace in the fourth quarter, the quickest in more than six years.
In November, goods-producing industries grew 0.6 percent even as the heavyweight manufacturing sector stagnated. Mining and oil and gas extraction led the gains with a 1.8 percent jump, followed by construction with a 1.1 percent rise.
The services industry, which had been more resilient during the recession, advanced 0.4 percent in November. Wholesale trade jumped 2.4 percent on strength across all major trade groups, Statscan said.
Meanwhile, the producer price index showed lesser inflationary pressures in December. Lower oil prices and a strengthening Canadian dollar knocked producer prices down by 0.1 percent in December. Raw materials prices fell 1.7 percent. (Reporting by Louise Egan; editing by Rob Wilson)