Canada Q4 2017 GDP annualized +1.7% vs +2.0% expected

December and Q4 GDP numbers

  • Q3 GDP was +1.7% annualized (revised to +1.5%)
  • December GDP +0.1% m/m vs +0.1% expected
  • November GDP was +0.4%
  • GDP +3.3% y/y vs +3.3% expected
  • H1 growth revised to 4.2% from 4.0% (annualized)

The headline is soft but it looks like it was all about revisions to growth early in the year and that 2017 GDP was in line with estimates. However the trend is a slowdown. The first half was 4.2% and the second half was 1.6%.

More details:

  • Goods production -0.1% m/m
  • Services production +0.1% m/m
  • Implicit price index +1.2% q/q
  • Q4 consumption was slowest pace since 2016
  • Inventories cut 0.7 pp from growth
  • Trade cut 1.1 pp from growth

Some of the details aren’t great. Spending on residential structures jumped 13.4% q/q annualized in the fourth quarter and that’s likely due to buying ahead of new mortgage rules that took effect Jan 1. It’s likely to be unwound in Q1 and beyond. That increase alone was responsible for a full percentage point of growth in Q4.

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