Macro Developments Since Sep BoC: Growth [3/3]

GDP: On Track To Undershoot BoC Forecasts Again

• There has only been one month of GDP data, but it was lacklustre as it printed 0.0% M/M (cons 0.1) in July after a 0.2% M/M decline in June and with August indicated to have increased just 0.1% M/M. It has left real GDP on the industry approach tracking at 0.0% annualized on a 3M/3M basis.
• The monthly data are separate to the quarterly expenditure-based series which the BoC forecasts, but it’s a weak follow-on from the surprisingly soft -0.2% annualized seen in Q2 (vs BoC forecast of +1.5%).
• Subsequent indicators haven’t been any better: finalized retail sales values fell -0.1% M/M in August (volumes -0.6% M/M, falling in four of the past six months) and were indicated as flat in the September advance. This omits the important category of services consumption but momentum on the goods side is clearly still particularly subdued.
• Putting it all together, it looks likely that real GDP growth will again undershoot the BoC’s forecast of 1.5% for Q3 from its July MPR, potentially seeing a faster return to excess supply than the early 2024 the Bank forecast. There have however been some disruptions including summer wildfires and BC port strikes, the latter which continued to impact 12% of retailers in August vs 17% in July.