Canada GDP Preview: Banks expecting Q1 GDP to disappoint

Today, we have an all-important release of Canadian Q1 GDP report due to be published, which is likely to attract most attention.

TD Securities

“TD looks for Q1 GDP to disappoint with a 0.4% advance, slightly below the market consensus (0.7%) and in line with the Bank of Canada's April projections. This incorporates a significant drag from net exports, and we expect the details to prove more upbeat with consumption and non-residential investment driving a rebound in domestic demand.”

“Industry level GDP should rise by 0.3% in March (market: 0.4%) on broad strength in goods and services which will provide a solid handoff to Q2 GDP.”

National Bank Financial

“Trade, is likely to weigh on the headline growth figure judging from monthly reports which showed real imports expanding strongly in the three months to March while real exports slumped. Finally, residential investment was also weak according to construction data and should thus weigh on growth in the quarter. All told, GDP may have expanded 0.9% in annualized terms in Q1.”

“Looking at monthly data, the handoff to Q2 looks very good, with March GDP on pace to expand 0.4% courtesy of gains in the wholesale and retail sectors.”

Wells Fargo

Analysts at Wells Fargo, expected a reading of 0.8% (annualized, quarter-over-quarter), in line with market consensus. 

“Q4 GDP rose just 0.4% quarter-over-quarter annualized, while final domestic demand was even softer, contracting at a 1.5% pace. While employment growth has been sturdy so far in 2019, retail sales data point to still subdued consumer spending in Q1, while mixed manufacturing sales also hint at only modest improvement in investment spending. That said, higher oil prices could impart a modest positive impulse on Canada’s economic growth.”

“The consensus is for Q1 GDP growth to rise to 0.8% quarter-over-quarter annualized, more than the 0.3% pace forecast from the Bank of Canada in its latest Monetary Policy Report.”