Canada's Q2 Growth Momentum Persists Amid Volatile Trade Policy
Canada's economic growth momentum is expected to persist near the end of Q2, according to recent data. The Bank of Canada highlighted two-sided risks to interest rates in their prior policy meetings, citing potential downside growth surprises and hike risks due to higher energy prices from conflict in the Middle East.
The wholesale sales are estimated by Statistics Canada to have risen 2.7% in June, driven by stronger sales in machinery, equipment, and supplies, mirroring a surge in equipment imports from the U.S. in June. This growth is consistent with more real GDP growth in June, capping off a solid Q2.
Along with an earlier 0.4% increase in advance retail sales in June and another increase in home resales, these data suggest persistent growth momentum near the end of Q2 and that quarterly real GDP growth is likely well above 2.2% (annualized). The sustainability of Q2's economic strength remains uncertain, with the path forward highly contingent on volatile U.S. trade policy.