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Initial Analyst Takes On GDP

CANADA
Hiking/likely hiking camp
  • BMO: Even with the soggy April reading, this report had plenty of redeeming qualities, and we are nudging up our estimate of Q2 growth. The bigger picture is that the Canadian economy is managing to keep its head above water in the face of many challenges.
  • RBC: Even after 450bps of rate hikes since March 2022, consumer spending has yet to materially soften to-date. We still expect the lagged impact of monetary policy will result in softening activity in the back half of 2023, but odds are still tilted towards an additional 25bp hike from the BoC in July.
  • TD: Q2 GDP growth is tracking around a trend pace. This would once again overshoot the BoC most recent 1.0% annualized estimate. Today's GDP print doesn't change the balance of risks towards another quarter-point hike of the policy rate at next meeting–markets are split down the middle on the odds of a hike. We think that ongoing strength in economic activity, a still-tight labour market, and inflation above target tips the likelihood towards a 25 bps hike to 5.00% in July.
Waiting camp
  • CIBC: While the strike by federal workers has created some noise within the data, the underlying trend still appears to show a weakening of growth following the very swift start to the year. For now we retain our call for no hike in July, and a final 25bp move in September, but the BoC's surveys later this morning and labour force survey next week could still tip the balance on that call.
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