Canada: Economic growth likely fell markedly in the 3Q – TDS

Analysts at TD Securities are expecting that the pace of Canadian economic growth fell markedly in the third quarter, tracking a 0.9% (q/q, annualized) expansion.

Key Quotes

“A large part of the slowing is down to net trade – exports are likely to have stood still in the third quarter (+0.0%), while imports came back somewhat following an earlier contraction (+2.7%). Only middling growth is anticipated for non-residential business investment (+1.7%) as uncertainty continues to take its toll.”

“Consumer spending is forecast to accelerate somewhat, but to only a modest (+1.7%) pace of growth. Residential investment (+9.6%) is expected to be the bright spot, helped by strength in both resale and homebuilding activity. Industry-level GDP is projected to rise by 0.1% in September, as stronger service sector activity is offset by a drag from manufacturing.”

“Manufacturing shipments fell by 0.7% m/m in real terms, capping off a disappointing Q3 for the industrial sector and weighing on more positive developments in the goods-producing sector. Oil and gas should provide a tailwind even with lingering shutdowns weighing on offshore activity, and construction activity should make a modest positive contribution on stronger residential building activity.”

“Meanwhile, services will benefit from the continued recovery in existing home sales along with an anticipated rebound in wholesale trade. A 0.1% print will provide a muted handoff to Q4, where we expect another quarter of sub-trend growth.”