Canadian GDP Barely Crawling
July 31, 2008
Monthly real GDP, calculated from the supply side, edged unexpectedly 0.1% lower in May, the third negative growth reading in the last four reported months. GDP rose only 0.6% between May 2007 and May 2008, a year during which industrial production slumped 4.6% including a 2.7% drop in energy output. Construction slipped for a third straight time in May and registered on-year growth of just 0.4%. Like overall GDP, wholesale trade and industrial production dropped for the third time in four months. Energy output posted a fourth consecutive decline. The retail sale had been a pocket of strength but firmed just 0.1% in May and by 0.3% at an annual rate over the last four reported months. After dropping 0.3% saar in 1Q08, real quarterly GDP measured from the demand side is unlikely to top 0.5% in the second quarter. The on-year consumer price increase is 3.1%, still cresting, and already exceeds the 3.0% central bank target interest rate. However, monetary officials in Canada like their counterparts in Britain and Australia have no inclination to tighten and are instead counting on significantly sub-trend demand to achieve medium-term inflation objectives.
Tags: Canadian Dollar
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