Canada: Pace of economic growth to fall markedly in third quarter – TD Securities

Previewing Friday's Gross Domestic Product (GDP) from Canada, "TD expects that the pace of economic growth fell markedly in the third quarter, tracking a 0.9% (q/q, annualized) expansion," said TD Securities analysts.

Key quotes

"A large part of the slowing is down to net trade – exports are likely to have stood still in the third quarter (+0.0%), while imports came back somewhat following an earlier contraction (+2.7%). Only middling growth is anticipated for non-residential business investment (+1.7%) as uncertainty continues to take its toll. Consumer spending is forecast to accelerate somewhat, but to only a modest (+1.7%) pace of growth. Residential investment (+9.6%) is expected to be the bright spot, helped by strength in both resale and homebuilding activity."

"Industry-level GDP is projected to rise by 0.1% in September, as stronger service sector activity is offset by a drag from manufacturing. Manufacturing shipments fell by 0.7% m/m in real terms, capping off a disappointing Q3 for the industrial sector and weighing on more positive developments in the goods-producing sector. Oil and gas should provide a tailwind even with lingering shutdowns weighing on offshore activity, and construction activity should make a modest positive contribution on stronger residential building activity."

"Meanwhile, services will benefit from the continued recovery in existing home sales along with the rebound in wholesale trade, although the CN strike will weigh on the transportation industry. A 0.1% print will provide a muted handoff to Q4, where we expect another quarter of sub-trend growth."