Non-Residential Fixed Investment in Canada
Economic activity growth slows in February, but strong outturn expected for Q1 as a whole
GDP expanded 0.1% in month-on-month seasonally-adjusted terms in February, which was a deterioration from January’s 0.6% increase and undershot the flash estimate of 0.3% growth. A contraction in manufacturing activity and slowdowns in mining and services—with particular weakness in wholesale, retail and transport services—were behind the headline reading.
On an annual basis, monthly GDP increased 2.5% in February, which was below January’s 3.2% expansion.
For March, the statistics office published a flash GDP estimate of -0.1% month on month, which would take the quarter-on-quarter expansion over Q1 as a whole to a robust 2.4% in annualized terms.
On the implications for monetary policy, TD Economics’ Marc Ercolao said:
“[The] GDP numbers corroborate the BoC’s recent guidance that monetary policy may need to be ‘restrictive for longer’. This doesn’t necessarily mean additional rate hikes are on the table, but it does provide further evidence that the start of rate cuts are less likely to occur in 2023. Our view is that the BoC will hold the policy rate into 2024 as lagged effects of interest rate hikes still need time to work their way through the economy.”
Canada Non-Residential Fixed Investment Chart
Canada Non-Residential Fixed Investment Data
|Non-Residential Fixed Investment (ann. var. %)||1.9||3.5||3.2||-11.6||4.3|