Canada Merchandise Imports (USD bn)

GDP expanded 0.1% month on month in October–November, with strong services-sector growth partially offset by contractions in the industrial sector. Moreover, Statistical Office preliminary data suggests that activity was flat in December, putting the quarter-on-quarter expansion for Q4 as a whole at 0.4%. Turning to this year, the economy appears resilient; in January, employment growth far outpaced market expectations and the manufacturing PMI rose back into expansionary territory. Moreover, the Central Bank likely ended its tightening cycle in January, which should support sentiment and limit the hit to demand ahead. However, the housing sector remains in the doldrums due to past interest rate hikes, with housing starts and home sales slumping in January.