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CANADA DATA: GDP Sees Mixed Implications From Firm Domestic Demand Drivers [1/2]

CANADA DATA
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  • Real GDP growth was roughly as expected in Q3 at 1.0% annualized (cons 1.1, range 0.8-1.3) along with generally encouraging revisions.
  • We knew that the level of GDP had been revised higher (with annual data pointing to 1.3% higher for 2023 as a whole) but the latest quarterly data show the level of quarterly GDP was 1.36% higher for 4Q23 before building to 1.45% higher for 2Q24.
  • That latest boost came from real GDP increasing 2.2% in Q2 (from 2.1) and 2.0% in Q1 (from 1.8), which helps lessen the impact from the realized miss in Q3, with that 1.0% vs the BoC’s forecast of 1.5%.
  • The quarterly details were mixed. Household consumption increased 3.5% annualized for its strongest quarter since 1Q23 (coincidentally the same stat as the US).
  • That helped see a continuation of robust final domestic demand growth at 2.4% in Q3 after an average 2.3% in 1H24 (vs an average 2.7% pre-revisions).
  • However, government spending remains very strong. Govt consumption increased 4.5% in Q3 after 3.8% in Q2 whilst govt investment increased 6.5% after 9.1%. That saw a non-annualized government contribution of 0.30pps after 0.28pps, or put another way, GDP growth would have been mildly negative in Q3 without govt spending (with its 0.26% Q/Q increase).
  • Business investment meanwhile slid -3.6% annualized as a small bounce in resi (3.0% after -7.4%) was easily offset by a swing lower in non-resi (-7.7% after 11.1%).
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  • Real GDP growth was roughly as expected in Q3 at 1.0% annualized (cons 1.1, range 0.8-1.3) along with generally encouraging revisions.
  • We knew that the level of GDP had been revised higher (with annual data pointing to 1.3% higher for 2023 as a whole) but the latest quarterly data show the level of quarterly GDP was 1.36% higher for 4Q23 before building to 1.45% higher for 2Q24.
  • That latest boost came from real GDP increasing 2.2% in Q2 (from 2.1) and 2.0% in Q1 (from 1.8), which helps lessen the impact from the realized miss in Q3, with that 1.0% vs the BoC’s forecast of 1.5%.
  • The quarterly details were mixed. Household consumption increased 3.5% annualized for its strongest quarter since 1Q23 (coincidentally the same stat as the US).
  • That helped see a continuation of robust final domestic demand growth at 2.4% in Q3 after an average 2.3% in 1H24 (vs an average 2.7% pre-revisions).
  • However, government spending remains very strong. Govt consumption increased 4.5% in Q3 after 3.8% in Q2 whilst govt investment increased 6.5% after 9.1%. That saw a non-annualized government contribution of 0.30pps after 0.28pps, or put another way, GDP growth would have been mildly negative in Q3 without govt spending (with its 0.26% Q/Q increase).
  • Business investment meanwhile slid -3.6% annualized as a small bounce in resi (3.0% after -7.4%) was easily offset by a swing lower in non-resi (-7.7% after 11.1%).