Canada: Rebound in auto production drives May GDP higher – TD Securities

TD Securities analysts point out that Canada’s industry-level GDP rose by 0.2% in May, in line with TD's forecast and slightly above the market consensus for a 0.1%.

Key Quotes

“As expected, the goods-producing sector provided the main driver for growth with a 0.6% increase, helped by a rebound in motor vehicle production. Motor vehicle manufacturing rose by 9.2% in May - a full recovery from the April shutdowns - and contributed roughly 0.07pp to the headline print, while ex-auto manufacturing contributed another 0.05pp.”

“Today's report marks the third consecutive beat on monthly GDP for the first time since early 2018, and pushed our tracking for Q2 growth further above BoC projections to 3.0% (BoC: 2.3%). However, the BoC sought to downplay the strength of Q2 growth in the July MPR, describing it as temporary, and is unlikely to change its tone after a few data prints given the focus on external trade risks.”