Economic growth misfiring again

Even allowing for the rebound in real exports in November, the 0.3% m/m decline in monthly GDP in October means that fourth-quarter GDP growth was probably 1.0% annualised or less, putting it well below the Bank of Canada’s already modest 1.5% forecast. With core inflation dropping further below the 2% mid-point of the Bank’s target range in recent months, the renewed weakness in economic growth is another reason to anticipate an interest rate cut before too much longer. That said, in light of Donald Trump’s unexpected election south of the border, the Bank of Canada might want to wait a few more months, particularly with the labour market still apparently in fine health.