Today’s Canadian GDP report showed an increase in activity of 0.1% in April, above expectations. According to National Bank of Canada’s analyst Krishen Rangasamy the majors surprise came from factories.
Key Quotes:
“Canada’s real GDP rose 0.1% in April, moderating after two months of solid growth. Of the 20 broad industrial sectors, 12 registered increases in output.”
“The Canadian GDP results for April were slightly better than expected. The major surprise was a strong performance from factories, the latter’s output surging despite earlier-reported slumping shipments during the month.”
“Since factory output was strong and shipments were weak, inventories must have increased, something that could hamper the pace of production in subsequent months.”
“Sectors such as retailing, arts/recreation and accommodation/food services, which were adversely affected by inclement weather during April, are likely to see a rebound in May.”
“It’s unclear how long the goods sector will be able to compensate for this, more so after an apparent deterioration in the trade relationship with the U.S. For now though, the available data suggests Canada’s GDP growth is on track to print around 2.5% annualized in the second quarter, i.e. roughly double the pace seen in Q1.”
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