Canada July GDP - Stronger but Q3 unlikely to reach BoC's forecast
July Canadian GDP with a 0.2% increase exceeded an unchanged preliminary estimate made with June’s data though the preliminary estimate for August is unchanged. If September is unchanged too Q3 would rise by 1.0% annualized, well below a 2.8% Bank of Canada projection made in July. Reaching the BoC projection would require an implausible 1.3% increase in September.
The Bank of Canada has already stated that it sees downside risk to its Q3 GDP projection. With inflation moving closer to target and excess supply in the economy this stronger than expected GDP gain is not an obstacle to further BoC easing, with an accelerated pace still possible. Yr/yr growth at 1.5%, while up from 1.3% in June, is still quite subdued.
Monthly data showed services up by 0.2% lifted by stronger than expected gains in retail and wholesale sales, though the gain simply matched June’s despite the improved retail and wholesale data meaning some slowing was seen elsewhere. Goods increased by 0.1% despite a second straight fall in construction and manufacturing seeing only a modest 0.3% rise after a 1.3% June decline. Mining was only a marginal negative at -0.2% while utilities at +1.3% saw a second straight strong month.
The preliminary estimate for August shows increases in oil and gas extraction and the public sector offset by declines in manufacturing and transportation and warehousing.
