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Scotiabank Expects Another Monthly Gain in Canada's May GDP

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Statistics Canada's preliminary estimate for May GDP is expected to show another monthly gain after an advance estimate pointed to 0.4% month-over-month growth in April, Scotiabank said in a note.

"As for May's preliminary estimate, I'm tracking another gain based on more limited readings. Hours worked were up by 0.6% m/m SA which is a solid plus given that GDP is hours worked times labour productivity," writes Head of Capital Markets Derek Holt. "In determining the latter, we can look to some of the activity readings including Statcan's advance guidance for several readings albeit with uncertainty over how the nominal guidance translates into volumes and how volumes line up with value-added GDP."

Holt suggests that 2.25% q/q seasonally adjusted annual rate growth in Q2 is a possibility, but "that's very tentative until we see April and May tomorrow and with little to nothing to go by for June thus far".

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