CANADA DATA: GDP Expected To Confirm Tepid Bounce In Q3 After Q2 Trade Hit

Tomorrow sees real GDP growth for Q3 and separate monthly data for the Sep/Oct advance report. The BoC puts more weight on the expenditure-based quarterly data, although the production-based monthly data still offer a valuable idea of momentum into Q4. However, both are likely more susceptible than usual to US trade-related revisions. 

• Canadian GDP data is released tomorrow at 0830ET for Q3 along with the monthly report for September and its advance estimate for October.
• Bloomberg consensus eyes real GDP growth of 0.5% annualized in Q3, with a range of -0.4% to 0.8%, after a heavy decline of -1.6% in Q2 when net exports dragged ~7.5pp from GDP.
• Six of the seven largest Canadian banks all look for 0.5% (BMO, Desjardins, National, RBC, Scotia and TD), with CIBC the exception at 0.7%. RBC doesn’t currently show in the Bloomberg survey.
• As for the monthly series, Bloomberg consensus of 0.2% M/M sees upside risk to the 0.1% indicated in last month’s advance estimate, following upward revisions to manufacturing and wholesale trade.
• It follows two noisier months with -0.3% M/M in Aug and 0.3% M/M in Jul, but the prior trend had been weaker with three consecutive -0.1% M/M prints through Apr-Jun.
• Analyst estimates on Bloomberg range from -0.1% to 0.2% M/M, with seven estimates for 0.2%, but RBC is again not included here and looks for a stronger 0.3% M/M.
• As for potential advance estimates for October, CIBC pencil in a “small 0.1% increase” on the back of “little information regarding October available as yet”.
• The BoC at last month’s MPR pencilled in a 0.5% increase in Q3 before 1.0% in Q4. More broadly, it sees real GDP growth of 0.5% Y/Y in 4Q25 before 1.6% in both 4Q26 and 4Q27.
• Helping put these numbers into context, the BoC estimates potential output growth of 1.6% in 2025, 1.0% in 2026 and 1.3% in 2027.
• The Bank opted for a hawkish cut last month, signalling pause ahead with the overnight rate of 2.25% deemed “about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment."
• BoC-dated OIS has nothing priced for the Dec 10 meeting although there is nearly another half a 25bp cut priced out in mid-2026. We suspect risk to nearer-term pricing from this release alone is to the downside.