| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | 0.3% | 0.1% | 0.5% | 0.6% |
| Year over Year | 2.5% | 3.0% | 3.2% |
Highlights
Canada GDP growth slowed down to a lower-than-expected monthly pace of 0.1 percent in February, following a 0.6 percent advance in January that was revised up from 0.5 percent. GDP increased 2.5 percent year-over-year.
The flash estimate for March is 0.1 percent contraction, pointing to a further weakening of activity led by declines in retail and wholesale trade, as well as in the mining and quarrying (except oil and gas) subsectors that were partially offset by increases in the public sector, in professional, scientific and technical services, and in administrative and support, waste management and remediation services.
Should the 0.1 percent contraction materialize, first quarter GDP would increase 0.6 percent, Statistics Canada estimates.
In February, both the goods-producing and services sectors edged up 0.1 percent after rising 0.6 percent in January, with a total of 12 out of 20 industries posting gains over the month.
Within goods-producing industries, manufacturing was down 0.1 percent after expanding 1.0 percent in January, led by non-durables, while agriculture, forestry, fishing and hunting contracted 0.9 percent. Growth increased in other industries: mining, quarrying and oil and gas extraction was up 0.1 percent, construction up 0.3 percent, and utilities 0.6 percent. Industrial production increased 0.1 percent in February and energy rose 0.4 percent, after both sectors expanded 0.7 percent in January.
Within services, activity increased in nine sectors, including public administration (0.2 percent), educational services. (0.5 percent), finance and insurance (0.3 percent) supported by non-mortgage debt, and professional, scientific, and technical services (0.6 percent). Dragging on services were declines in wholesale trade, retail trade, transportation and warehousing, management of companies and enterprises, accommodation and foods services, as well as arts, entertainment and recreation.
Today's weaker-than-expected data will bring reassurance to the Bank of Canada that its monetary policy tightening is working its way through the economy. Combined with Econoday's Consensus Divergence Index, at minus 13 and indicative of a minor underperformance of the economy, the central bank has good reasons to remain on the sidelines for now.
In its April Monetary Policy Report, the BoC projected a 2.3 percent annual GDP growth in the first quarter (2.0 percent year-over-year), slowing down to 1.0 percent in the second quarter, with negative contributions from inventories and imports, housing and business fixed investment, while consumption should still support GDP growth along with exports. In the second half of this year, the central bank projects an excess supply in the Canadian economy, with subdued consumer spending continuing into 2024. Overall, GDP is projected to expand 1.4 percent in 2023, 1.3 percent in 2024 and 2.5 percent in 2025.
The flash estimate for March is 0.1 percent contraction, pointing to a further weakening of activity led by declines in retail and wholesale trade, as well as in the mining and quarrying (except oil and gas) subsectors that were partially offset by increases in the public sector, in professional, scientific and technical services, and in administrative and support, waste management and remediation services.
Should the 0.1 percent contraction materialize, first quarter GDP would increase 0.6 percent, Statistics Canada estimates.
In February, both the goods-producing and services sectors edged up 0.1 percent after rising 0.6 percent in January, with a total of 12 out of 20 industries posting gains over the month.
Within goods-producing industries, manufacturing was down 0.1 percent after expanding 1.0 percent in January, led by non-durables, while agriculture, forestry, fishing and hunting contracted 0.9 percent. Growth increased in other industries: mining, quarrying and oil and gas extraction was up 0.1 percent, construction up 0.3 percent, and utilities 0.6 percent. Industrial production increased 0.1 percent in February and energy rose 0.4 percent, after both sectors expanded 0.7 percent in January.
Within services, activity increased in nine sectors, including public administration (0.2 percent), educational services. (0.5 percent), finance and insurance (0.3 percent) supported by non-mortgage debt, and professional, scientific, and technical services (0.6 percent). Dragging on services were declines in wholesale trade, retail trade, transportation and warehousing, management of companies and enterprises, accommodation and foods services, as well as arts, entertainment and recreation.
Today's weaker-than-expected data will bring reassurance to the Bank of Canada that its monetary policy tightening is working its way through the economy. Combined with Econoday's Consensus Divergence Index, at minus 13 and indicative of a minor underperformance of the economy, the central bank has good reasons to remain on the sidelines for now.
In its April Monetary Policy Report, the BoC projected a 2.3 percent annual GDP growth in the first quarter (2.0 percent year-over-year), slowing down to 1.0 percent in the second quarter, with negative contributions from inventories and imports, housing and business fixed investment, while consumption should still support GDP growth along with exports. In the second half of this year, the central bank projects an excess supply in the Canadian economy, with subdued consumer spending continuing into 2024. Overall, GDP is projected to expand 1.4 percent in 2023, 1.3 percent in 2024 and 2.5 percent in 2025.
Market Consensus Before Announcement
After jumping a much stronger-than-expected 0.5 percent on the month in January, GDP in February is expected to rise 0.3 percent.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.
Description
Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.
