Canada's Q2 GDP beat very soft expectations

Canada's Q2 GDP beat very soft expectations (-0.5%q/q ann. vs est. -1.0%), and printed in line with the BoC's projection for the quarter. Domestic demand was weak and somewhat disappointing, net exports were about what was expected, and inventories fell less than anticipated and were where the upside surprise came from. 

More encouraging was monthly GDP for June, which showed a decent pickup at the end of the quarter. The firm handoff to Q3 makes the BoC's +1.5% target within reach. We also had a softer signal in the RBC manufacturing PMI for August that was also released and posted a sub-50 figure (headline 49.4 after 50.8 in July). Being just a hair below the 50 threshold isn't a very strong signal, but still indicates softer manufacturing business conditions, and is a knock to the slight improving trend of recent months. One thing that's worth highlighting is that the regional breakdown showed oil producing regions as the drag in this report, that were not fully offset by the rest of the country.