The first look at second quarter Canadian growth
- Best quarter since 2011
- Q1 was +3.7%
- Q4 2016 was +2.7%
- Economists estimates ranged from +2.4% to +4.0%
- Year-over-year GDP 4.3%
- Prior 4.6% y/y (revised to 4.7%)
- The past two y/y numbers were the best two since 2001
- June GDP +0.3% m/m vs +0.1% exp
- May GDP +0.6% (unrevised)
Fantastic reading, very big beat. Canadian dollar higher, sending USD/CAD down to 1.2587 from 1.2650.
Details:
- Household consumption +4.6%
- Government consumption +2.5%
- Final domestic demand +0.9% q/q
The final domestic demand number was one we highlighted before the release and it was very strong, which is a good sign for Q3.
More details:
- Outlays in goods +1.9% -- strongest since Q2 2007
- Durable goods +2.3%
- Investment in residential structures -1.2%
- Exports +2.3%
- Export volumes of crude +7.4%
- Imports +1.8%
- Business investment in non-residential structures +2.4%
- Business inventories +$11.5B vs +$10.5B prior
- Business investment added 0.1 pp to q/q growth
- Inventories up 7.1% in Q2 and 13.7% (annualized) in Q1
- Corporate earnings -0.1%
There are a few concerning numbers here. Inventories added to GDP and that spike in crude volumes is not sustainable but they are small negatives in a great report. The real story here is that Canadian consumers are on a tear and even with more spending, the savings rate rose, so it was a story of higher incomes.
