Canada: Solid growth momentum has resumed – Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that solid growth momentum for Canadian economy has resumed; strong Feb GDP (+0.4%), seven year highs in the IVEY PMI, continued decent momentum in (full time) employment and a big uplift in March manufacturing sales (+1.4%) among the more notable data in recent weeks.

Key Quotes

“That, fading NAFTA risks and a firming terms of trade backed by 3 ½ year highs in crude oil prices will underwrite the BoC’s growing confidence in the recovery.”

“Markets lean strongly in favour of a hike at their next MPR, pricing in an 88% chance, though their next meeting May 30 is receiving some attention too, markets pricing in a 32% probability. Would not entirely rule out a May 30 hike but suspect the BoC’s focus on helping enhance the supply side of the economy will win out, leaving them sidelined, albeit with a stronger signal that a another hike is coming soon.”

“CAD should continue to outperform amid heightened BoC hike risk and persistently firm energy prices.”


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