Canadian Q4 and December GDP highlights:
- Canadian Q4 GDP annualized at 2.4% versus 2.0% expected
- The Q3 reading was 2.8% (revised to 3.2%)
- Quarterly growth (not annualized) 0.6%
- December GDP 0.3% m/m vs -0.2% prior
- Dec GDP 2.8% y/y vs 2.5% prior.
- Full release from StatsCan
For an economy that was ravaged by a drop in oil prices, average growth of 2.8% in Q3 and Q4 is an impressive performance. The bad news is that of the 0.6% quarterly growth, 0.4 percentage points were inventory building.
Still, you can forget about a Bank of Canada rate cut tomorrow. USD/CAD down 80 pips in a flash to 1.2450. Talk about bids at 1.2440 but big technical support at 1.2340-1.2380 is the area that's key.
For the 2014 year, that puts growth at 2.6%, that's 0.2 percentage points faster than the US.
The thing that irks the Bank of Canada is the lack of business investment in Canada.
Business gross fixed capital formation rose 0.9% in 2014 after increasing 0.8% in 2013. This follows an average annual increase of 8.9% in the previous three years. Business investment in residential structures increased 2.8%, after declining 0.4% in 2013. Outlays on renovations and new home construction were up 3.9% and 0.5% respectively. Business investment in plant and equipment edged up 0.1%, its growth decelerating for the fourth consecutive year.
