Canada: Economic growth remains intact - Wells Fargo
|Analysts from Wells Fargo, look for the Canadian dollar to gain renewed strength and see further gains over time.
Key Quotes:
“Third quarter growth has slowed compared to the robust rates seen in the first half of the year. However, fundamentals suggest continued strength in the Canadian economy, with domestic demand remaining elevated, business activity continuing to improve and the unemployment rate currently sitting at a nine year low of just 5.9 percent.”
“Consumption appears to be leading growth, with business spending having bounced back this year, after declining in seven out of the eight quarters in 2015 and 2016. Similarly, consumer spending continues to expand. However, we have been cautioning that household debt levels in Canada are getting worryingly high, which could dampen future consumption.”
“Inflation remains tepid between the Bank of Canada’s (BoC) 1-3 percent target. After increasing its overnight lending rate to 1.0 percent at its September meeting, the BoC has remained on hold. Despite the strong labor market, uncertainties remain around housing policies and NAFTA renegotiations, which have led the BoC to remain on hold.”
“We look for the Canadian dollar to gain renewed strength and see further gains over time. Economic growth remains intact, with tight labor market trends and a slight firming of inflation. Fundamentals suggest the Canadian economy will grow 2.9 percent for full year 2017.”
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