Canada’s economy contracted by less than expected in April, despite a sudden surge of Covid-19 cases during the spring season.
Real GDP declined 0.3% in April, following 11 straight months of gains. Although economists polled by Bloomberg forecast a contraction of 0.8%, Canada’s economic activity is still 1% below pre-pandemic levels of February 2020. According to Statistics Canada, 12 of the 20 industrial sectors reported declines, as a contraction in services-producing industries more than offset the 0.5% increase in goods-producing industries.
The retail trade sector noted a 5.5% decrease in April, as a number of key provinces reinstated pandemic restrictions in wake of a third wave of Covid-19 cases. The clothing and clothing accessories sector noted a 21% decline, while the building material and garden equipment and supplies reported a 7.9% decrease. Similarly, the accommodation and food services sector fell 4.6% in April
In the meantime, Canada’s construction sector increased 2.4% in April, marking the fifth consecutive month of gains. The majority of the expansion in this category stemmed from the residential building construction subsector, which jumped 4.1% amid continued growth in single-family dwellings. On the other hand, however, the real estate, rental and leasing sector declined 0.7%, down for the first time since October of last year as real estate activity across key urban centres slowed down.
The country’s manufacturing sector fell 1% in April, following a 1.5% increase in the previous month, as both non-durable and durable manufacturing declined. Mining, quarrying, and oil and gas extraction was up 1.4%, with all three subsectors reporting gains.
Albeit the slight decline in April’s economic activity, policy makers at the Bank of Canada will likely take the latest figures into account on July 14, during when the central bank is expected to make a decision on whether or not to further taper its monetary policy.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.