Weak growth in Canada in the second quarter
Canadian GDP data released yesterday showed lacklustre economic growth for the second quarter of 2016, as the country suffered its worst contraction since 2009. Our economists had warned us of the potential for such a reading, and have noted several interesting points:
- Companies continue to invest less and consumption was disappointing
- Exports were handicapped by massive destocking in the United States and the halt in petroleum production due to forest fires in Alberta
- Government spending made a positive contribution to growth
What are the key take-home messages here? According to our economists, the negative points should be temporary, while federal government spending should continue to support growth. In other words, Canadian GDP should rally in the third quarter. Markets appear to share our opinion, and the Canadian dollar ended the day without a clear trend, even though crude oil closed down 3.5%.
Although some indicators will be released today in both Canada and the United States, attention is more focused on U.S. job data scheduled for tomorrow. Feel free to contact us to review your strategy and your market orders.
