Canadian GDP Growth Hits Half The Estimate, Previous Data Revised Lower

Canada’s economy started the year strong, but things are changing fast. Statistics Canada (Stat Can) real gross domestic (GDP) growth came in slower-than-expected in February. Today’s data also included a downward revision for January, and a preliminary estimate of flat growth for the rest of the quarter. Any signs of life the economy showed at the start of the year now appear to be just noise. 

Canada’s Economy Grew Half The Rate of Preliminary Estimates

Canadian economic output came in much lower than preliminary data implied. Real GDP grew 0.2% in February, 0.1 points below expectations and half of Stat Can’s 0.4% preliminary estimate for the month. 

Canadian GDP Growth Is Hitting A Wall 

Canadian real GDP in chained 2017 dollars.

Source: Statistics Canada. 

Just 12 of the 20 sectors tracked showed gains, with the remaining 8 contracting in the month. In addition, 7 sectors remain weaker than last year, emphasizing that January’s growth surprise may have led experts to assume the economy was stronger than reality. 

Strong January Data Gets A Downward Revision 

Speaking of January’s surprise growth, Stat Can made a downward revision to the month. Growth was revised 0.1 points lower to 0.5% in January, boosted temporarily by the end of the public strike in the month. This month’s data and revisions further reinforce the temporary nature of last month’s boost.  

Canadian GDP Growth Is Even Slower Than The BoC Forecast

Looking forward, the agency doesn’t see real GDP growth being quite as resilient. Preliminary estimates for growth are flat for March, with potential gains made in utilities and real estate offset by drops in manufacturing and retail. If the official numbers match when released next month, the first quarter will show real growth of 0.6%, and annualized growth of 2.5%. That’s 0.3 points lower than the Bank of Canada (BoC) most recently forecast.

The year started with the perception that Canada might not be left behind the global growth rally. Despite the BoC potentially overestimating how fast the economy is moving, they may be right that Canada won’t be joining the global upward revisions they recently forecast.

6 Comments

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  • Paul Reilly 1 month ago

    Hi.

    I enjoy your posts. They are succinct and regular.
    How much of our GDP growth is just government hiring?

  • Dan 1 month ago

    This is what happens when you hire 40% more public sector workers. These workers do not contribute to an economy’s GDP. The current government can boast about high employment; however, most of the jobs today are lower paying jobs and many people are working 2 or more jobs now which skews the employment numbers. Also, with more investments leaving Canada I can see the GDP numbers heading to deep negative territory. I hope I’m wrong.

  • Sheep 1 month ago

    A million more international students packed like Brunswick sardines inside a Brampton basement paying $1000 a month rent per capita will do the trick!

  • Ice Spice Nice 1 month ago

    I thought that increasing the population means increased consumption and productivity? Where is the GDP going if a million new greater fools are coming in Canada to help make the grocery chains, telecoms and bank oligopolies richer?

  • B 1 month ago

    Canada is about to get a much needed wake up call.

  • Jimmy 1 month ago

    What do they expect? Wr have a corrupt government that seems to be getting away with scandal after scandal with taxpayer money. A government that tells investors of LNG to take a hike while importing Saudi oil. Gas is too high, food prices are too high. Housing too high. After 5 years, it’s depressing. Low productivity. Suprize!

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