Canada – In May, real GDP in Canada grew 0.1%. Goods production posted a solid performance, advancing 0.6% on the back of mining and oil and gas extraction. Service production retreated 0.1%, but losses were concentrated in wholesale trade (-1.8%). So far in Q2, real GDP is up 2.2% at an annual rate. Given the strong job creation in June and the sharp increase in hours worked in Q2, we expect activity to fair better in June, which should translate into quarterly growth on the order of 3%. As this is in line with projections in its latest Monetary Policy Report, the Bank of Canada should continue to normalize interest rates as planned.

United States – In Q2, real GDP in the United States progressed 2.4%, down from a revised 3.7% in Q1. Consumption rose 1.6% and business investment in machinery and equipment soared 21.9%, contributing 1.2 and 1.4 percentage points, respectively, to GDP growth. International trade shaved 2.8 p.p. from growth, while business inventories added 1.1 p.p. The composition of GDP growth improved compared with Q1 thanks to an acceleration of domestic demand growth from 1.3% to 4.1%.

In Q3, we expect activity to expand in the vicinity of 3%. Investment in machinery and equipment should register double-digit growth once again. As confirmed in the June report on new durable goods orders, new orders of nondefence capital goods excluding aircraft are going into Q3
up 8%. Given that unfilled orders began increasing after only three quarters this recovery, shipments should record strong growth from July to September. Going forward, it will be of critical importance for the U.S. economy to create jobs in order to sustain consumption growth.