MNI 5 THINGS: Exports Boost 2Q Canada GDP;Biz Investment Slows>

--5 Things We Learned From Canadian GDP Data

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from the second 

quarter Canadian GDP data and the June data on GDP by industry released 

Thursday by Statistics Canada: 

     - Canada real GDP growth accelerated to an annualized rate of 2.9% 

in the second quarter, slightly below the 3.0% expected by analysts in a 

MNI survey. The report was stronger than the Bank of Canada's 2.8% 

projection, especially since the first quarter growth was revised up to 

1.4% from 1.3%. Annualized GDP growth was 2.871% unrounded. On a 

quarterly basis, GDP expanded 0.7% after a 0.4% steady pace recorded 

each of the previous three quarters. 

     - On the other hand, data on the monthly GDP by industry showed a 

flat performance in June, while analysts had expected output to edge up 

0.1%, showing momentum slowed going into the third quarter. Goods GDP 

contracted 0.2% while services were up 0.1%. Much of the quarterly 0.8% 

gain owed to May's 0.5% increase. 

     - GDP by expenditure showed that exports were the major contributor 

to the second quarter growth performance: exports of goods and services 

rose 2.9% (after +0.6% in the first quarter), the largest quarterly gain 

in four years. Export contribution to annualized GDP growth rose to 3.7 

percentage points, the largest since the fourth quarter 2014. While 

energy led goods exports, overall exports excluding energy were still up 

2.2% after contracting 0.6% in the first quarter. With imports up 1.6%, 

the contribution of net exports to the annualized GDP growth was 1.5 

points. 

     - Household spending rebounded 0.6% in the second quarter after 

rising 0.3% the first quarter, with a focus on services. Household 

spending contribution increased to 1.9 points from 1.2 points. 

     - Business investment, on the other hand, slowed, reaching a 

quarterly growth pace of 0.4%, the slowest in two years, with most 

components losing momentum. In the housing sector, the deterioration 

stopped in the second quarter, with residential investment up 0.3% after 

falling 2.7% the previous quarter. This allowed housing contribution to 

turn modestly positive (0.085 points) after trimming GDP the previous 

quarter. Investment in inventories trimmed GDP by 0.4 points as 

businesses accumulated inventories at a slower pace. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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