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Soft GDP Momentum Adds Downside Risk To BoC Growth Forecast

CANADA
  • GDP data showed a further slowing in economic momentum, with July's 0.1% M/M beating weak expectations of -0.1% but with essentially zero growth estimated for August.
  • At the margin, signs of slowing demand lends support to those analysts looking for the rate pauses heading into 2023 but CPI and BoC surveys ahead of the Oct 26 BoC will be more important.
  • If the August advance is accurate it will leave GDP at just 1.1% annualized on a 3M/3M basis.
  • The monthly data don’t directly tally with the main quarterly reports and ran stronger in 1H22, but they add downside risk to the BoC’s July forecast of GDP slowing to 2% in Q3, after the 3.3% observed in Q2 was below the 4% from the same forecast round.
  • Back to the July data, retail output was the lowest in real terms since Dec but housing-related contractions appear to have slowed from Q2.

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  • GDP data showed a further slowing in economic momentum, with July's 0.1% M/M beating weak expectations of -0.1% but with essentially zero growth estimated for August.
  • At the margin, signs of slowing demand lends support to those analysts looking for the rate pauses heading into 2023 but CPI and BoC surveys ahead of the Oct 26 BoC will be more important.
  • If the August advance is accurate it will leave GDP at just 1.1% annualized on a 3M/3M basis.
  • The monthly data don’t directly tally with the main quarterly reports and ran stronger in 1H22, but they add downside risk to the BoC’s July forecast of GDP slowing to 2% in Q3, after the 3.3% observed in Q2 was below the 4% from the same forecast round.
  • Back to the July data, retail output was the lowest in real terms since Dec but housing-related contractions appear to have slowed from Q2.