Canadian Growth surprises; BoC On Hold For the Rest Of The Year - Nomura

Canadian Growth surprises; BoC On Hold For the Rest Of The Year - Nomura

31 March 2016, 19:34
Vasilii Apostolidi
0
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Monthly GDP increased by 0.6% m-o-m in January, much higher than expectations, and follows a 0.2% m-o-m rise in December. This is the strongest monthly growth since July 2011. Overall, this is a very positive report showing that growth continues to recover.

The rebound in manufacturing activity over the past three months and in the non-resource sector suggests that 1) improved growth in the US is helping Canada, 2) the weaker exchange rate is helping growth and 3) the non-resource sector is strengthening. The question is whether the momentum will continue.

Nevertheless, the strong start to Q1 suggests that growth could be above 3% q-o-q ar. We continue to believe that the Bank of Canada will keep rates on hold for the rest of the year.

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