Disappointing Q2 and July GDP data
Today's soft Canadian GDP report continues to reverberate with economists re-evaluating growth this year after Q2 contracted by 1.1% compared to a 2.5% gain expected.
"Revisions were to blame for wrongfooting economists' predictions, with the latest numbers revealing that the economy was on a weaker footing than previously suggested by Statistics Canada," wrote CIBC after the release. "The wounds were narrow but deep. Severe drops in residential resale and export activity more than offset gains in housing construction and business investment."
Q2 was largely locked down so maybe a decline wasn't a total shock but the lack of a rebound in July when the economy reopened is deeply concerning.
"The fact that the economy didn't recover significant ground during the latest lull in Covid cases in July is very disappointing. The revisions to past monthly readings combined with a much weaker-than-expected start to Q3 will pull our forecast for 2021 GDP growth well below the 6% pace we had previously projected. Despite the rebound in job growth, it seems like GDP hasn't kept up, and now a fourth wave is about to test the economy once again."
