As a pancake

Canada's real GDP was virtually unchanged in August from the previous month, according to data released this morning by Statistics Canada. The outcome was slightly below StatsCan's preliminary estimate of 0.1 percent growth.  With the newly-released preliminary estimate for September also showing next to no change, it seems possible that quarterly GDP figures, due for release on November 30,  will show that the economy was on the brink of an "official" recession in Q2 and Q3. No need (I hope) to repeat that the so-called "official" definition is loved by lazy journalists much more than by hard-working bloggers. 

Monthly GDP numbers are generally quite volatile, so it is remarkable to look at the data tables behind today's release and see the lack of any movement in GDP over the past four months.  After growing 0.2 percent in May, the economy edged lower in June, then posted almost no change at all in real terms in July or August.  Want proof?  Here are the actual numbers, in billions of chained C$:   June 2023: 2081.9 -- July 2023: 2081.8 -- August 2023: 2082.5.

Looking behind those very stable aggregate numbers does offer a couple of clues about what's going on in the economy. Goods producing industries have shown a decline in output in each month since April; the weakest sub-sector here is agriculture and forestry, which suggests that the impact of forest fires continues to influence the data. In contrast, service producing sectors grew marginally in July and August after a small decline in June. The growth in August was led by a strong rise in wholesale trade, which is unlikely to be sustained if the economy is indeed now on a much slower growth track. 

Today's data are entirely consistent with the forecasts published by the Bank of Canada in support of its rate decision last week. Indeed, the year-on-year rise in real GDP for August, at 0.9 percent, exactly matches the Bank's updated prediction for the full calendar year. The Bank's next fixed announcement date is December 6, so it will have access to the full Q3 GDP data when it makes its decision. Barring some unexpected bounce in growth in September, it is very hard to see how there will be any case for a rate hike at that time.

Lastly, a quick heads-up to one Benjamin Reitzes, an economist at Bank of Montreal. In this CBC article he is quoted as saying that the weak showing "will cause recession chatter to ramp up quickly".  I'm not sure where Benjamin hangs out, but all the Canadian media outlets I read have been screaming "recession" for the last eighteen months and more. Like the guys carrying "The end of the world is nigh" placards, they were always going to be right eventually.