There are no expectations for the release, and October’s print was flat in M/M terms. The BoC continues to focus on the output gap as opposed to inflation.
What the bank desks are saying:
BMO: The Canadian economy likely expanded 0.4% in November, bouncing back from the prior month’s flat reading. Manufacturing activity was up sharply, and there’s some additional upside risk from a chemicals plant that came back online in the month. Wholesale and retail trade were both modestly firmer, and should contribute to growth. Oil sands production is expected to rebound after maintenance weighed on October’s activity, while higher oil prices could boost conventional production and support services. Home sales jumped in November as well, which should lift real estate activity, but could boost other services, like finance and legal. Hours worked were down sharply in the month, which is a potential negative. However, if the Bank of Canada’s forecast for 2.5% Q4 growth is accurate, November GDP needs to be at least 0.5% and more likely 0.6%, so that’s a potential rational for upside risk. Our call would put Q4 growth closer to 2%.
CIBC: It’s going to be a great month for Canadian output, with November readings already in hand pointing to an advance on the order of 0.4%. That comes off the heels of a flat performance for the economy heading into the release, symbolizing what’s going to partly be a catch-up month for GDP. Some of the strength will be tied to factories, which benefited from a surge in two-way trade, and saw volumes expand by an extremely healthy 2.5%. The pulling forward of the holiday shopping season also meant that the underlying consumption trend was healthy, and solid volume growth in retail/wholesale trade will lend a helping hand as well. The Bank hiked earlier this month and released a new set of forecasts for the economy. It didn’t, however, lower its Q4 estimate, which still stands at 2.5%. Even with a strong November, growth is likely to undershoot that modestly at 2%, removing some of the perceived impetus for another hike in the near term, which markets continue to place decent odds on.
RBC: We are forecasting 0.4% m/m growth in November GDP after a flat reading in October. Part of the reasoning behind the flat reading was unscheduled maintenance shutdowns at oil sands facilities, leading to the mining, oil and gas component detracting 0.1pp from headline growth. A reversal is expected for the category in November and the uncertain magnitude could be an upside risk to our forecast. Activity reports have been firmer in November, with manufacturing ex-autos volumes up 0.8% m/m, wholesale volumes up 0.5% m/m, and retail volumes up 0.3% m/m. The forecasted 0.4% gain is consistent with Q4 growth ~2% annualized, about 0.5pp below the BoC’s re-affirmed estimate for the quarter in the January 17th MPR.
Scotiabank: The economy probably put in a healthy pace of growth in November such that tracking for Q4 GDP growth likely improved to about the 2% annualized pace. That compares to the BoC’s estimated growth rate of 2.5% for Q4 as provided in the January edition of the Monetary Policy Report. I figure the economy grew by about 0.5% m/m in November based upon a regression model of GDP versus several high-frequency readings. Manufacturing shipment volumes soared by 2.5% m/m and housing starts advanced by 13% m/m in seasonally adjusted terms. Retail sales volumes were up 0.3% m/m. Hours worked fell 0.7% m/m which requires a solid productivity gain in order to get decent GDP growth but hours worked then advanced by about double that pace the following month. Wholesale trade also put in a solid performance. Somewhat large declines in output in the agricultural, mining and utility sectors may reverse and add to headline gains although more of the upside through utilities is likely to come in ensuing months. After Canada’s recent growth run a glass-half -empty bias would say the back half of 2017 was disappointing but a glass-half-full bias would say it was a minor miracle to get still pretty decent growth after the rapid growth experienced over the prior four quarters.