Canada’s monthly GDP statistics tend to be quite volatile and are never quite up to date.

Over the three months ending August, Canada’s monthly GDP was expanding at a rather slow 1.3% annual rate. However, when calculated over twelve months, GDP growth was a much more satisfactory 2.5%, with goods production exceeding the growth of services (3.2% compared to 2.2%)

As of August, output in the Canadian economy increased for seventh months in a row, albeit that growth was very slow in four of the seven months.

However, the monthly data does provide a bit of a preview of third-quarter GDP growth (i.e. the broader expenditures measure of GDP).

Canada’s economy bumped up at a 2.9% annual growth rate in the second quarter, and thus far is trending at just under 2% in the third quarter.

As for the inflation developments, one of the accompanying charts indicates that virtually all the important CPI measures are trending at around a 2% annual rate. 

Canada’s aggregate CPI slowed to 2.2% in September from 2.8% in August. The slowdown in inflation was due almost entirely to transportation prices, which eased to 3.9% from 7.2% in August.

The Bank of Canada's three core inflation measures also slipped lower in September, with CPI-trim falling to 2.1%, CPI-median to 2.0% and CPI-common to 1.9%.

In sum, the Bank of Canada’s task ahead seems relatively straightforward, despite the risk of raising interest rates in an era of high consumer and mortgage debt.

The Canadian economy’s 2% growth trend has been buttressed by the USMCA trade agreement with the US and Mexico.

While 2% growth seems low compared to faster growth in the US, nonetheless Canada’s major macro indicators suggest that the economy is operating close to capacity, and with the lowest unemployment rate in decades.