07:22 AM EST, 11/25/2024 (MT Newswires) -- RBC looks for gross domestic product growth in Canada to have picked up slightly to 0.2% in September on Friday after holding steady in August.

That should leave the Q3 reading in line with the bank's projection for a 1% annualized increase-slightly below the Bank of Canada's 1.5% forecast and less than half the 2.1% rise in Q2.

Canada will release September and Q3 GDP on Friday, at 8:30 a.m. ET.

Consumer spending likely increased in Q3 given a 5% annualized rate rise in retail sales, but a pullback in equipment imports is flagging a drop in business investment after a surprisingly large Q2 increase. A small pick-up in home resales in August and September likely drove residential investment higher in Q3, the first increase in four quarters.

The 0.2% month-over-month increase RBC estimates in September GDP is lower than Statistics Canada's 0.3% advance estimate, with the rise partly due to the rail transportation bounce-back after disruptions in August. Wholesale and retail sale volumes rose in September, but manufacturing output likely contracted again, while hours worked fell 0.4% in September.

More importantly, the increase in Q3 GDP won't prevent another contraction in real per-person activity, extending that downward trend for a sixth consecutive quarter, stated RBC. The soft growth backdrop and broadly easing inflation pressures are the main reasons the bank's base-case projections look for another 50 basis points rate cut from the BoC in December.

September's GDP report will also include annual benchmark revisions with early estimates already suggesting that the level of GDP in 2023 was 1.3% higher than previously estimated, added RBC. However, that is unlikely to change the broader trajectory for per-capita output, which has been persistently lower and consistent with a rising unemployment rate and slowing inflation pressures.