08:16 AM EST, 12/03/2024 (MT Newswires) -- The more Rosenberg Research looks at last Friday's Canadian gross domestic product data, the less it likes it.

A 1.0% annualized growth figure for Q3 pales next to the 2.8% United States performance. On a year-over-year basis, Canadian real GDP growth is running at 1.5% expansion versus +2.7% in the US. The 1.5% is flattered by the negative 0.6% annualized year-ago base.

While the consumer and government sectors were alive and well, Canada had export volumes dipping 1.1% at an annual rate, non-residential construction was flat while capital expenditure tanked 27.8% in what was the largest contraction since Q2 2020.

Declines in business spending of this magnitude very rarely occur outside of official recessions, pointed out Rosenberg Research. Tack on what real GDI did in Q3 -- virtually flat with a minuscule 0.35% annualized uptick.

The government sector bailed out the national economy in Q3 with a huge 4.8% annualized spending expansion. Strip that out, and real GDP declined at a 0.3% annual rate. Not a good look, stated Rosenberg.

The Bank of Canada should remain aggressive on rate cuts, and the Canadian dollar (CAD or loonie) remains a "sell" on this super-soft data -- the fact that the GDP price deflator came in at an on-target 2.2% annualized pace last quarter should be leaving the central bank in a confident mood, according to Rosenberg.

Real GDP per capita declined for the sixth consecutive quarter, falling by 0.4%. Only one other time in recorded history has Canada's real GDP per capita decayed sequentially for six quarters, and it was during the 1981-82 recession -- this measure has also been negative in eight out of the last nine quarters.

Real per capita GDP is now down 1.4% on a year-over-year basis and lower than it was in the spring of 2017. Rosenberg indicates this as one of the reasons Prime Minister Justin Trudeau and his Liberals are languishing in the polls.

The monthly data showed a serious loss of economic momentum through the quarter. Real GDP only edged up less than 0.1% month over month in September, and Statistics Canada's estimates reveal that October growth also came in at just 0.1%.

This now leaves Q4 running nearly flat before markets had received any data for November and December. Considering that the BoC's estimated range for potential GDP for 2024 to 2026 is between 1.4% and 2.5%, the deflationary gap is widening, and that requires much lower rates ahead, it added.

As for concerns that the Canadian dollar will slide out of bed, so be it, said Rosenberg. The manufacturing sector is begging for a weaker Canadian dollar, having shrunk 0.3% month over month in September, riding a four-month stretch of losses and down 4.0% on a year-over-year basis.