Canada: Consensus Outlook Little Changed


On the heels of December’s 0.2% (m-o-m) decline, output-based GDP rebounded by 0.2% in January, driven in large part by a 1.2% surge in manufacturing. This was spurred by both durables and non-durables manufacturing (+0.5% and 0.7% m-o-m, respectively) but was not enough to offset December’s massive 1.9% decline. While temporary factory shutdowns over the holidays were a major reason behind December’s fall in production, manufacturing has also weakened on the back of faltering external demand. Industrial production as a whole rebounded by a less marked 0.7% (m-o-m) following December’s 1.1% fall, supported by mining, oil, & gas output. Energy production was flat, though, and agriculture, forestry & fishing fell. Elsewhere, manufacturing sales dropped by 0.2% (m-o-m) in January following a 3.3% contraction in December, pulled down by weakness in transportation equipment. On the upside, new orders soared by 5.1%, almost wiping out the previous month’s 5.3% decline. Consequently, our panel’s forecasts for industrial production in 2013 have edged up this month. The outlook for GDP growth, however, is little changed. This coincides with some modest fiscal tightening announced in the 2013 budget. The government aims to balance the Federal accounts by FY15/16, one year earlier than previously anticipated. The budget did direct C$1.4bn in spending in an effort to support jobs, manufacturing and new infrastructure, though.

Some observers have expressed concern over the outlook for consumer spending. Following low interest rates and a property boom, household debt levels soared. Consequently, consumers are now scaling back purchases. After a 1.8% (m-o-m) fall in December, real retail sales in January were flat.

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