CANADA DATA: Trade Data, Key To Q3 GDP, Delayed On US Gov't Shutdown

The ongoing US government shutdown will impact Canadian Q3 GDP data and trade data for the foreseeable future.

• Specifically, StatCan notified Friday that it will not publish the September goods and services trade data on Nov 4 as scheduled, and will have to produce "special estimates" of Canadian exports to the US when it compiles Q3 GDP (due for Nov 28 release).
• This is not entirely unexpected, as StatCan had reported this week that it hadn't received September data from the US on goods imports from Canada, a key input in the Canadian goods trade series, while the services data rely on "critical inputs" from US federal agencies.
• Additionally such postponements are not unprecedented: StatCan points out the Dec 2018-Jan 2019 US federal shutdown "led to the postponement of the international merchandise trade statistics publication for the December 2018 reference month and the rescheduling of several subsequent releases once US operations resumed."
• The monthly GDP readings won't be affected as they are estimated by industry and don't incorporate the goods trade data. The next readings are for August (Oct 31) and Sept (Nov 28 alongside the quarter). It also won't impact quarterly GDP by income.
• The Q3 estimate could be unusually sensitive to StatCan's imputations given widespread expectations of a sizeable bounce in net exports' contribution to quarterly growth after the Q2 collapse amid the US-Canada trade war. The uncertainty over the reliability of the data may encourage the BOC to discount it to some degree when it makes its Dec 10 policy decision.
• MNI estimated after the August trade data that long as import volume growth exceeded that of export growth in September by at most 3pp, net exports would contribute positively to growth in the 3rd quarter. That would be the case with a flat increase in both import and export volumes in September, which would translate into around a 1.5pp contribution to Q3 GDP (SAAR), vs -8.0pp in Q2.