Q4 GDP growth came in at only +0.4% q/q annualized, far below already weak consensus estimates of about +1%. It was the slowest pace in 2.5 years, and there was little to like in the report. Household consumption slowed to only +0.7%, the weakest in seven years. Non-residential investment fell -10.9%, the third consecutive loss, while residential investment also fell, losing a sharp -14.7%. Only an increase in inventories saved the day, since without it GDP would have fallen to a -1.1% loss. On a monthly basis, December GDP lost -0.1% m/m, the third decline in four months, while the energy sector lost a sharp -2%, also the third decline in four months. Without the energy sector, the economy would have grown +0.1% m/m in December. Canadian crude oil prices collapsed at the end of 2018 because there wasn’t enough pipeline capacity to bring it to market. The first part of the year looks no better as there are forced production shutdowns to lower the over-supply.
