MNI 5 THINGS: Oil, Mfg Seen Helping Canada Feb GDP Rebound

--5 Things To Look For In Canada February GDP

By Yali N'Diaye

     OTTAWA (MNI) - Statistics Canada will release the February GDP by industry

data Tuesday morning. Ahead of the release, we highlight five themes for

particular attention:    

--OIL, MANUFACTURING REBOUND

     Analysts in a MNI survey expect February GDP to recover 0.3% after a

surprise contraction in January. Forecasts range from 0.1% to 0.4%.

     After a 3.6% drop in January due to "unscheduled maintenance shutdowns" in

non-conventional oil extraction, the latter is expected to rebound in February.

     The manufacturing sector is also expected to be a significant contributor,

given the 2.0% real sales growth in February, more than offsetting January's

1.2% drop.

     Labor market data sent mixed signals about the manufacturing sector, with

16,500 less manufacturing jobs according to the Labor Force Survey, while the

payrolls survey showed 12,900 manufacturing jobs were added over the month.

     Real retail sales rose 0.3% in February, also suggesting a positive

contribution, albeit limited.

--HIGHER HOURS WORKED

     Hours worked increased in February, another indication of higher

production. Hours worked rose 0.6% on the month after a 0.6% decline in January,

according to Statistics Canada's LFS.

     The payroll employment, earnings and hours survey, however, said non-farm

payroll employees worked an average of 32.7 hours per week in February, little

changed from January.

--WEAKER WHOLESALE SALES, REAL ESTATE

     On the other hand, wholesale sales volumes dropped 0.9% in February,

suggesting a negative contribution.

     Also on the downside, real estate and rental and leasing is likely to

further contract, although to a lesser extent than in January, as home resales

decreased 6.5% in February. Real estate and rental and leasing contracted 0.5%

in January, the largest drop since October 2008.

--EYE NON-ENERGY

     With energy expected to explain a significant part of February's real GDP,

it will be interesting to see how output excluding energy fared.

     In January, GDP excluding energy edged up 0.1%, the same as in December.

     Goods output fell 0.4% and services were flat, failing to post a gain for

the first time since March 2016.

--SOFT 1Q 

     The Bank of Canada has already factored in a soft first quarter GDP. In its

April Monetary Policy Report, the central bank revised down its first quarter

growth estimate to 1.3% from 2.5%, before rebounding to 2.5% in the second

quarter. 

     A 0.3% recovery in February would still fit the softening scenario.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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