Canadian economy likely to have grown 3.5 pct in Q2 2018 – TD Economics

The Canadian second quarter economic growth data is set to be released tomorrow. According to a TD Economics research report, the Canadian economy is likely to have grown 3.5 percent quarter-on-quarter. The headline growth is expected to have been mainly driven by exports. Export growth of 13.6 percent is expected to have attracted several headlines; however, the domestic picture seems strong as well.

Final domestic demand is expected to have risen by over 3 percent, aided by a re-acceleration of consumer spending. Non-residential investment is likely to have moderation from the first quarters scorching rate, but to a still-respectable 3 percent to 4 percent growth rate. Residential investment is expected to have come in negative for a second quarter, eased by the weak resale market early in the quarter, with soft construction activity also a possibility given the higher frequency data, stated TD Economics.

From an income perspective, price gains throughout most major components should help nominal GDP reach 5.6 percent growth rate for the quarter. Industry-level GDP is expected to record a 0.1 percent growth in June due to deceleration in services. Retail and wholesale sales both dropped in the month and the steady grind higher in home sales are expected to provide just a modest offset. This will leave goods sector output to drive the monthly print on strength in manufacturing sales and utilities, which are coming off an outsized pullback in May.

“This should provide a rather muted handoff to the Q3, which fits with our expectation for growth to slow to the low-2 percent range”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bullish at 78.0902, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -55.2044. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex