Canada’s economy continues to outperform, and received further revisions of prior data. Statistics Canada (Stat Can) data shows real gross domestic product (GDP) showed surprising growth in October, coming in 3x expectations as real estate returned as a driver. September data has also been revised to show double the growth originally reported, indicating the economy is much stronger than believed. However, this data is in direct conflict with most other economic indicators that reflect a more recession-like picture.
Canadian GDP Grew 3x Faster Than Expected In October
Canadian GDP accelerated much faster than expected in the latest data. Real GDP advanced 0.3% in October, triple what the agency expected in its preliminary data. The agency notes 12 of the 18 major sectors saw growth.
GDP is composed of Goods and Services, and both are growing once again. Goods (+0.9%) advanced for the first time following 4 months of declines, led by a recovery in the Mining, Quarrying, and Oil & Gas sector. Services (+0.1%) climbed for a fifth consecutive month, driven by the Real Estate, Rental & Leasing sector.
The agency isn’t as optimistic the accelerated growth will continue into the next report. Stat Can’s preliminary estimate shows a contraction in November (-0.1%), though these “flash estimates” have been so off the mark they’re basically useless at this point.
October’s surprise now has GDP growth for Q4 tracking closer to the Bank of Canada (BoC) estimate. When it delivered a supersized cut just a few weeks ago, the central bank had partially justified it with the belief it would be significantly below target. If November surprises with any growth, it may match or even exceed the forecast. In that case, the market would be considered a little overstimulated.
Canadian GDP Gets More Upward Revisions, Paints A Different Picture Than Other Data Points
Canada’s real GDP data appears to have gotten another revision. The agency updated the data to show real GDP grew 0.2% in September, more than double what was originally reported. In other words, the economy is doing much better than reported. Though the anecdotal evidence such as consumer spending and unemployment doesn’t seem to jive with that narrative.
Canada’s economy continues to show surprising growth, with upward revisions printing shocking numbers. On the surface, that’s good news—but the return of real estate as a driver while manufacturing continues to weaken indicates productivity is set to fall even further.
The growth is also unusual in the sense that it doesn’t go together with other recently reported data. Inflation cooling is a sign of weak, not robust consumer demand. The currency is also at one of the weakest levels in decades, indicating less than optimal trade. Then there’s the rising unemployment and weaker revenues forecast in the Government of Canada’s recently released Fall Economic Statement. However, those GDP numbers keep getting stronger—even long after they’re reported.
English (US) · 