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CANADA DATA: Monthly Data Puts Q4 GDP On The Low Side Of BoC Expectations

CANADA DATA

GDP picked up by more than was anticipated in October, rising 0.3% M/M vs 0.2% survey for the highest readings since April - but this was overshadowed by the November advance estimate which showed the first monthly contraction of the year, at -0.1%.

  • First looking at the October reading: the 3M/3M annual rate of GDP growth picked up to 1.7% (from 1.2% prior), with the annual rate rising to 1.9% (vs 1.7% prior, 1.6% expected), fastest sin 18 months. 12 of 20 sectors grew: sectors whose growth improved from September including manufacturing (0.3%, from 0.0% and highest since May), real estate (9-month high 0.5% M/M), and mining (2.4% for the first positive reading since June).  The wholesale trade and retail sectors both decelerated but saw positive growth, with public administration relatively steady
  • The BoC was disappointed by the 1.0% realized in the separate expenditure-based forecast of 1.5% for Q3 and looks likely to be disappointed again with its forecast of 2.0% for Q4.
  • Incorporating the -0.1% M/M Nov advance figure in the sectoral data - which may have been impacted by industrial action including at Canada Post and ports - and assuming flat growth in December, quarterly growth is set to come out at 1.7%, even with the boost from October.
  • This of course comes even before potential policy risks, including US tariffs on Canadian imports and retaliatory measures in kind, and restrained immigration.
  • While BOC pricing changed little on the data (a 25bp cut is still roughly 65% priced), the Canadian dollar weakened a further 0.1% vs USD, with USDCAD up 0.4% on the session at 1.4424 (December's post-pandemic high to watch is 1.4467).
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GDP picked up by more than was anticipated in October, rising 0.3% M/M vs 0.2% survey for the highest readings since April - but this was overshadowed by the November advance estimate which showed the first monthly contraction of the year, at -0.1%.

  • First looking at the October reading: the 3M/3M annual rate of GDP growth picked up to 1.7% (from 1.2% prior), with the annual rate rising to 1.9% (vs 1.7% prior, 1.6% expected), fastest sin 18 months. 12 of 20 sectors grew: sectors whose growth improved from September including manufacturing (0.3%, from 0.0% and highest since May), real estate (9-month high 0.5% M/M), and mining (2.4% for the first positive reading since June).  The wholesale trade and retail sectors both decelerated but saw positive growth, with public administration relatively steady
  • The BoC was disappointed by the 1.0% realized in the separate expenditure-based forecast of 1.5% for Q3 and looks likely to be disappointed again with its forecast of 2.0% for Q4.
  • Incorporating the -0.1% M/M Nov advance figure in the sectoral data - which may have been impacted by industrial action including at Canada Post and ports - and assuming flat growth in December, quarterly growth is set to come out at 1.7%, even with the boost from October.
  • This of course comes even before potential policy risks, including US tariffs on Canadian imports and retaliatory measures in kind, and restrained immigration.
  • While BOC pricing changed little on the data (a 25bp cut is still roughly 65% priced), the Canadian dollar weakened a further 0.1% vs USD, with USDCAD up 0.4% on the session at 1.4424 (December's post-pandemic high to watch is 1.4467).
canadarealgdp