Canadian Real GDP (August 2019)

Another month of soft Canadian GDP growth

• The Canadian economy eked out a modest gain in August, as real GDP rose just 0.1% month-on-month. Growth was held back by just a few sectors, as 14 of the 20 major industry groups reported expanded output.
• Among the goods-producing sectors, relatively healthy prints in the manufacturing (+0.5%) and construction (+0.3%) sectors were offset somewhat by a drop in utilities (-1.5%) on cooler weather. The sector as a whole expanded by a modest 0.2% month-on-month.  
• It was a similar story among the service sectors. Notable gains among professional services (+0.7%), finance and insurance (+0.5%) and real estate (+0.3%) were partially offset by a 1.3% drop in wholesale trade activity, leaving the sector as a whole up a modest 0.1%. 

Key Implications

• It may be Halloween today, but this isn't a particularly scary report. Echoing the July report, a slightly soft headline masked decent strength. If it weren't for cooler August weather bringing utilities lower, GDP would have come in closer to 0.2%. Indeed, aside from the bad wholesale numbers, there was a fair bit to like here, including healthy numbers among manufacturers, professional services, and the real estate sector.
• All told, today's report leaves our third quarter tracking a relatively modest 1.2% annualized pace of growth. This is pretty close to the Bank of Canada's updated view (1.3%). This means that the data in the months ahead, particularly consumer spending and real estate activity, will matter for the path of monetary policy.

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