MNI DATA BRIEF: Canada Flash Q2 GDP +2.5% Annualized

Canada's GDP grew at a 2.5% annualized pace in the second quarter according to a flash government estimate Friday, slightly better than the central bank's projection and adding to policy makers' view of a solid rebound in the second half of the year as pandemic lockdowns ease.

Statistics Canada said the quarter ended with a 0.7% gain for June, according to another flash estimate, led by retail and hospitality as local governments lifted social distancing rules and there was big progress with vaccinations. Official figures for April and May showed weakness linked to third-wave shutdowns-- a decline of 0.3% in May that matched economist forecasts and an April decline revised to 0.5% from 0.3%.

Total output is about 2% below the pre-pandemic level, ground that could be made up quickly, with the Bank of Canada estimating growth at a 7.3% annualized pace in the third quarter. The BOC will likely see the recovery as strong enough to further taper QE in October and raise rates in the second half of next year. (See: MNI INTERVIEW:BOC to End Active QE Before Rate Hike-Ex-Adviser)