Q3 GDP grew +2% q/q annualized as expected, to a +2.1% y/y rate, but the details were mixed. On the plus side, inventories were responsible for dragging down the headline by -1.3pp. But consumption was weak, growing only +1.2% q/q annualized to a slow +1.8% y/y, and investment was especially disappointing, shrinking -5% q/q. And the biggest contributor to growth by far was a sharp decrease in imports of -7.8% q/q due to a surge in domestic petroleum production. We expect GDP growth for all of 2018 to be +2.1% and +2% for 2019. Western Canadian Select (WCS) crude has been trading at a massive discount to WTI due to the inability to transport WCS, but that discount, which had been close to USD50 per barrel, has narrowed to around USD35 and is expected to shrink to USD20 after an 8.7% production cut ordered by Alberta. The symbolic signing of the USMCA may help stabilize some trade concerns, although the metals tariffs still remain in place.
