Canada’s economy likely to have grown 0.2 pct sequentially in May, says TD Economics

The Canadian economy is expected to have risen in May. According to a TD Economics research report, the industry level GDP is likely to have grown 0.2 percent in May, matching the prior month. The growth is likely to reflect strength in goods and services, though both should receive considerable support from the auto industry.

Manufacturing output rose sharply in May on the strength of motor vehicle shipments and automobiles accounted for all of the growth in nominal retail sales. In the meantime, a shar easing in Toronto housing market should give an offset through the conduit of residential construction and broker commissions, though the latter is a small portion of the wider industry, stated TD Economics.

With headwinds from real estate likely to continue into the third quarter and consumer spending unlikely to repeat its good performance, it might be at the peak of the current cycle.

“With Q2 GDP tracking at 3.2 percent, the real side of the economy is performing in line with the Bank of Canada’s expectations, signalling a high likelihood for a 25bp hike in October”, added TD Economics.