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TD Securities analysts point out that Canada’s industry-level GDP rose by 0.2% in May, in line with TD’s forecast and slightly above the market consensus for a 0.1%.

Key Quotes

“As expected, the goods-producing sector provided the main driver for growth with a 0.6% increase, helped by a rebound in motor vehicle production. Motor vehicle manufacturing rose by 9.2% in May – a full recovery from the April shutdowns – and contributed roughly 0.07pp to the headline print, while ex-auto manufacturing contributed another 0.05pp.”

“Today’s report marks the third consecutive beat on monthly GDP for the first time since early 2018, and pushed our tracking for Q2 growth further above BoC projections to 3.0% (BoC: 2.3%). However, the BoC sought to downplay the strength of Q2 growth in the July MPR, describing it as temporary, and is unlikely to change its tone after a few data prints given the focus on external trade risks.”