Canada GDP Preview: Real Q3 GDP is expected to rebound 3.4%
Canada GDP Preview: Real Q3 GDP is expected to rebound 3.4% in the report due Wednesday after the 1.6% drop in Q2. A bounce-back in real net exports is seen driving the pick-up. Consumption growth is seen slowing, while M&E investment should manage another small gain. Inventories are the usual wildcard, projected to modestly subtract from GDP. Meanwhile, September GDP by industry is seen up 0.1% m/m, leaving a tepid hand-off to Q4. Moreover, the Q3 surge will be driven by a return to production and activity in the Forth McMurray region after the wildfire temporarily halted production in Q2. Governor Poloz, speaking Monday, said the bank will need to see through some things boosting Q3 GDP. Those thing are, of course the temporary factors, which will fall-off in Q4 and return growth to below 2%. Overall, Q3 and September GDP that is even roughly in-line with our estimate would match the scenario put forth by the BoC, and hence sustain our expectation for no change in rates next week.