Canada: Expecting an above consensus 0.4% GDP growth – TD Securities

“TD looks for industry-level GDP to rise by 0.4% m/m in May on the heels of a broad pickup in activity data,” TD Securities argue in a recently published report.  

Key quotes

“Goods output will benefit from energy and a rebound in manufacturing sales while utilities will act as a headwind on a return to seasonal temperatures after cold weather saw a sharp rise in electricity output for April. Residential construction is also expected to weigh modestly on growth, though a surge in June housing starts suggests a rebound is right around the corner. On the service side we look for a broad advance in output, with retail sales and food services benefitting from the return to normal weather. This would leave Q2 growth tracking near a 3% pace, slightly above Bank of Canada projections.”

“We think the bar is low for the data to offer some temporary support for CAD, given that positioning in the G10 looks increasingly one-sided. The USD has also failed to make fresh highs, suggesting some room for a tactical rebound. The downside break of trendline support seen near 1.3140 increases the room for a relief rally, though we look to use dips as buying opportunities.”