CIBC Research discusses its reaction to today's Canada Q2 GDP print.
"While GDP growth was solid in Q2 as a whole, it was weaker than anticipated and a slow end to the quarter plus soft start to Q3 suggest that the economy is reacting quicker to rising interest rates than the Bank of Canada may have been anticipating. The 3.3% annualized gain in Q2 was below the +4.4% expected by the consensus and also the 4% forecast by the Bank of Canada in its latest MPR," CIBC notes.
"Growth was driven largely by a surge in consumer spending on services, as restrictions continued to ease and demand for travel, dining out etc recovered more fully, and also a rebuilding of inventories. Residential investment was a big negative, however, and will continue to be a drag in Q3 as well with the rapid rise in interest rates cooling home resale and renovation activity in particular," CIBC adds.