While Canadian growth data may not look stellar, it is in positive territory and is supported by strong internal consumer demand.
Recent economic numbers have elicited surprise on the upside. For example, the May employment report revealed 35,000 new jobs vs. forecasts for a 16,000 increase. Also, on the trade front, there was a higher-than-expected C$5.1 billion (vs. a C$4.5 billion estimate) April surplus.
The latest gross domestic product (GDP) numbers have come in under the BOC’s 3-percent growth target; the first quarter saw a 2.3 percent reading. Johnathon Basile, economist at Credit Suisse First Boston, expects second quarter GDP to come in at 2.9 percent.
Looking into the second half, Basile is more upbeat, with a forecast for 3.7 percent GDP growth for both the third and fourth quarters.
The inflation picture remains relatively well-contained, as core CPI inflation eased to a 1.7-percent year over year reading in April, which remains below the BOC’s 2-percent target rate.
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