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GDP Advances with Broad-Based Gains

Mar 29, 2019

The Conference Board of Canada’s Economics Director Matthew Stewart offers the following insights on today’s Gross Domestic Product (GDP) data:


“This morning’s GDP report was unambiguously strong. Despite the better-than-expected start to the year, 2019 will be a year of slow economic growth and that will keep the Bank of Canada on the sidelines throughout the year.”
—Matthew Stewart, Economics Director, The Conference Board of Canada


  • Real GDP increased by 0.3 per cent in January after posting 0.1 per cent declines in the preceding two months.
  • January’s growth was driven by broad-based gains with only two (mining and accommodation and food services) of the 20 major industry groupings posting declines in the month.
  • A drop in activity in the mining sector was expected given the mandatory production cuts that began that month in Alberta. Overall, the contraction in mining and oil and gas extraction subtracted 0.15 percentage points from monthly GDP growth.
  • The good news in today’s report:
    • Residential construction and GDP from offices of real estate agents and brokers increased in the month, a welcome development after the large declines in residential investment observed at the end of 2018.
    • Another weak spot heading into 2019 was abysmal business investment spending. This morning’s GDP report showed strong increases in:
      • machinery and equipment wholesaling (up 0.9 per cent);
      • machinery manufacturing (+1.5 per cent);
      • computer and electronic manufacturing (+2.9 per cent);
      • electrical equipment, appliance and component manufacturing (+7.1 per cent)—a potential prelude to better investment spending going forward.
  • This morning’s report was unambiguously strong—especially considering the large drag from the energy sector. Despite this better-than-expected start to the year, economic growth is expected to remain weak in 2019, although we are cautiously optimistic that growth will improve over the second half of the year, as outlined in our latest Canadian Outlook. Overall, this data does not change our view that the Bank of Canada will not raise interest rates this year.

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