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Monthly GDP Offers First Main Local Data Since BoC Decision

CANADA
  • Wednesday sees monthly GDP for Nov/Dec advance at 0830ET, landing shortly after US ADP employment and likely overshadowed by the US ECI for Q4 at the same time.
  • Nevertheless, it marks an important domestic update, with analysts sticking with the 0.1% estimate from last month’s advance. If accurate, it would see the first monthly GDP growth since May.
  • Looking to December, alternate advance estimates are mostly stronger on the month but they’re also nominal measures. Retail sales (+0.8%) and wholesale sales (+0.8%) both increased, as did hours worked (+0.4% after -0.7%) but manufacturing sales slipped (-0.6%).
  • As it is, TD look for “another weak” 0.0-0.1% in Dec whilst CIBC note indicators have “been somewhat mixed, albeit leaning towards a further slight increase in activity.”
  • A flat December advance and no revisions would tentatively leave Q4 GDP at just 0.5% annualized on an industry basis. The BoC last week lowered its Q4 GDP forecast from 0.8% to 0.0% (based on the different expenditure approach).
  • With a high bar to further hikes, especially after the BoC's somewhat dovish pivot, risks from a market reaction perspective are likely skewed towards a softer print.

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  • Wednesday sees monthly GDP for Nov/Dec advance at 0830ET, landing shortly after US ADP employment and likely overshadowed by the US ECI for Q4 at the same time.
  • Nevertheless, it marks an important domestic update, with analysts sticking with the 0.1% estimate from last month’s advance. If accurate, it would see the first monthly GDP growth since May.
  • Looking to December, alternate advance estimates are mostly stronger on the month but they’re also nominal measures. Retail sales (+0.8%) and wholesale sales (+0.8%) both increased, as did hours worked (+0.4% after -0.7%) but manufacturing sales slipped (-0.6%).
  • As it is, TD look for “another weak” 0.0-0.1% in Dec whilst CIBC note indicators have “been somewhat mixed, albeit leaning towards a further slight increase in activity.”
  • A flat December advance and no revisions would tentatively leave Q4 GDP at just 0.5% annualized on an industry basis. The BoC last week lowered its Q4 GDP forecast from 0.8% to 0.0% (based on the different expenditure approach).
  • With a high bar to further hikes, especially after the BoC's somewhat dovish pivot, risks from a market reaction perspective are likely skewed towards a softer print.