Canada Q2 GDP -0.5% vs -1.0% expected

The first reading on Canadian Q2 GDP:

• Estimates ranged from -0.7% to -1.3%
• Prior revised to -0.8% from -0.6%
• q/q GDP -0.1%
• Implicit prices +0.4% q/q
• June GDP +0.5% vs +0.2% expected (fastest since May 2014)
• Economy grew 0.6% from a year earlier
• Household consumption +2.3% from +0.5% in Q1
• Exports rose 0.4% while imports fell 1.5%

Quick drop in USD/CAD.

This is a better than expected report but one metric stands out as a harbinger of worse-to-come. Business investment down 7.9% in Q2 after a 10.9% decline in Q1. That shaved 1.6 percentage points from the report. Household consumption added 1.3 percentage points.

The Q2 contraction matches the BOC forecast released in July. They tend to only move when their forecasts are proven wrong.