Does this give you some hint?
Canadian July GDP declines modestly, representing the first decline in 11 months
GDP output in July dropped an expected 0.1% in the month, following gains of 0.2% and 0.1% in June and May, respectively. The weakening although modest was broadly based with both goods-producing and service-producing industries declining 0.1% in the month.
Market expectations of a 0.1% drop in July GDP were in part informed by a disappointing manufacturing sales report released earlier, which indicated declining activity in the month. This expectation was confirmed in this morning’s report with the manufacturing component dropping 0.7% although this did not fully reverse the 1.1% jump recorded in June. On the goods-producing side of the economy, declines were also recorded in construction (-0.5%) and utilities (-0.4%). One offset was provided by a 1.1% jump in the mining and oil and gas extraction component resuming strong growth that had been evident so far this year after a 0.5% drop in June.
The prospect of an overall decline in GDP was also flagged by earlier-released reports for July wholesale and retail trade. This weakness was confirmed in this morning’s report with declines of 0.2% and 0.5% in the wholesale and retail sales components, respectively. These declines were partially offset by gains in administrative services (0.5%) and information and cultural services (0.4%).
The drop in July GDP was disappointing but not unexpected given the earlier-released reports. With employment growth remaining robust during August 2010, we do not assume that this declining activity will persist. As well, various policy actions, such as the July 1 introduction of the HST, may have advanced activity into the first half of the year at the expense of activity in July. With that said, today reported drop points to some downside risk to our current third-quarter 2010 forecast of 3.0% GDP growth therein suggesting a rate closer to the second-quarter's 2.0% pace. The Bank of Canada’s July Monetary Policy Report projected third-quarter growth of 2.8%. With recent inflation numbers for August coming in slightly weaker than expected, an undershoot on growth would provide further reason for the central bank to move to the sidelines after raising the overnight rate 25 basis points at each of the last three policy meetings. Recent indications of below-potential growth in the US (the gain in the second-quarter GDP reported this morning of 1.7% and indications of third-quarter growth of only 2.0%), also, warrant a pause. Although we expect greater strength in both economies by the final quarter of 2010, until this emerges in the economic data, we expect the Bank of Canada to remain on the sidelines until March of next year.
Paul Ferley, Assistant Chief Economist, RBC Economics |
發表於 2010-9-28 13:53
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