Third quarter GDP came in largely as expected, growing at a +1.3% q/q annualized rate which was much slower than Q2’s +3.5% (revised down from +3.7%). Consumption was tepid at +1.5% which, although better than last quarter’s +0.5%, perhaps indicated consumers’ unease about the trade situation. Indeed exports shrank -1.5% and overall net exports took -0.6pp off of the headline. But trade concerns were absent in business investment which gained a strong +9.5%, and residential investment soared +13.3%, the highest in eight years, as the housing market continued to expand. Overall inflation remained tepid at 1.4% y/y. With weak inflation and a GDP report essentially in line with the Bank of Canada’s forecast, any rate cut is still some months away. We maintain our GDP growth forecast for all of 2019 at +1.7%, and while 2020 is expected to be similar, it will be dependent on any downdraft in global trade, or a sharp slowdown in the U.S.
