The early Statistics Canada estimate for 1.2% annualized growth in Q4 is well above the Bank of Canada’s MPR
forecast for a flat reading. It came as November GDP rose 0.2% compared to the 0.1% advanced reading and December accelerated to +0.3% m/m.
CIBC highlights that the upside surprise came from sectors where supply constraints are easing and that could actually be disinflationary while sectors related to domestic demand like retail declined.
“The apparent momentum towards the end of 2023 suggests that Q1 GDP may be a little
stronger than we had previously anticipated. However, with signposts of domestic demand looking weaker than the
headline GDP data, we still suspect that any growth in activity during the first half of this year will be marginal. That will
result in a further upward drift in the unemployment rate and bring a first interest rate cut from the Bank of Canada in
June,” CIBC writes.
USD/CAD fell after the data but that came alongside broader US dollar selling on falling Treasury yields.
USDCAD 10 mins