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Analysts On Monthly GDP Report

CANADA
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CIBC and RBC see today’s monthly GDP print as proof that early Q1 strength was temporary but Scotia are more cautious.

  • BMO: “While Q1 looks like it was decent overall, the loss of momentum as the quarter progressed is the bigger takeaway from this report. That puts additional pressure on the BoC to begin cutting as soon as June (which is still dependent on CPI in a few weeks). Unfortunately, persistently strong U.S. data are making things increasingly complicated for the Bank, as it appears that the Fed could be on hold for a while.”
  • CIBC: “We suspected that strength in GDP at the start of the year largely reflected an easing of previous supply constraints as well as better than normal winter weather, and the waning of momentum since January supports that view. If growth remains sluggish at the start of Q2 as we expect, and inflation doesn't heat up again in April, the BoC should start gradually reducing interest rates at the June meeting.”
  • RBC: “Today’s GDP report confirmed our expectations that the January surge in output was temporary, and in no way marked an inflection point for the growth backdrop in Canada that remains very weak. [… T]ogether with an increasingly soft labour market (unemployment rate was up 1.1% from end of 2022) and substantially slower inflation pressures are consistent with the BoC to start easing the monetary tap on the economy soon. Our own base case forecast assumes the first cut will come in June.”
  • Scotia: “Markets are interpreting another hot sign of US inflationary pressures from the labour market as added reason to forget about the Fed easing any time soon which makes it more challenging for the BoC to deliver material easing—even if it proves to be warranted which remains highly debatable. […] Take out utilities as just a weather report and GDP was up 0.3% m/m in February which is very solid after 0.5% growth in January. As for March being flat, be careful, there may be difficulty doing seasonal adjustments for the fact that Good Friday/Easter was earlier than is typical. Depending on the industry, that meant 1–3 fewer days of activity/production compared to a 'normal' March which could easily be a big deal to tracking m/m % changes.”
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CIBC and RBC see today’s monthly GDP print as proof that early Q1 strength was temporary but Scotia are more cautious.

  • BMO: “While Q1 looks like it was decent overall, the loss of momentum as the quarter progressed is the bigger takeaway from this report. That puts additional pressure on the BoC to begin cutting as soon as June (which is still dependent on CPI in a few weeks). Unfortunately, persistently strong U.S. data are making things increasingly complicated for the Bank, as it appears that the Fed could be on hold for a while.”
  • CIBC: “We suspected that strength in GDP at the start of the year largely reflected an easing of previous supply constraints as well as better than normal winter weather, and the waning of momentum since January supports that view. If growth remains sluggish at the start of Q2 as we expect, and inflation doesn't heat up again in April, the BoC should start gradually reducing interest rates at the June meeting.”
  • RBC: “Today’s GDP report confirmed our expectations that the January surge in output was temporary, and in no way marked an inflection point for the growth backdrop in Canada that remains very weak. [… T]ogether with an increasingly soft labour market (unemployment rate was up 1.1% from end of 2022) and substantially slower inflation pressures are consistent with the BoC to start easing the monetary tap on the economy soon. Our own base case forecast assumes the first cut will come in June.”
  • Scotia: “Markets are interpreting another hot sign of US inflationary pressures from the labour market as added reason to forget about the Fed easing any time soon which makes it more challenging for the BoC to deliver material easing—even if it proves to be warranted which remains highly debatable. […] Take out utilities as just a weather report and GDP was up 0.3% m/m in February which is very solid after 0.5% growth in January. As for March being flat, be careful, there may be difficulty doing seasonal adjustments for the fact that Good Friday/Easter was earlier than is typical. Depending on the industry, that meant 1–3 fewer days of activity/production compared to a 'normal' March which could easily be a big deal to tracking m/m % changes.”