Canada’s recovery appears to be showing continued resiliency, despite a second wave of pandemic-related closures that forced numerous businesses to shut down at the beginning of the year.
Following an increase of 0.1% in December, the economy expanded by 0.7% in January, significantly outpacing the 0.3% growth forecast by analysts. The latest GDP print suggests Canada’s economic recovery continues to remain strong despite ongoing lockdowns and rising Covid-19 case numbers in several key regions. The latest GDP increase puts total economic activity only 3% below February 2020 levels.
Both the goods-producing and services-producing sectors of Canada’s economy grew in January, with increases of 1.5% and 0.4%, respectively. According to Statistics Canada, wholesale trade expanded by 3.9% at the beginning of the year, offsetting December’s contraction of 1.5%. Similarly, Canada’s manufacturing sector also noted growth in January, increasing by 1.9% after a decline of 0.7% in the month prior.
The mining, quarrying, and oil and gas extraction sector rose by 2.7% in the first month of the year, marking the fifth consecutive month of gains as all subsectors expanded. Oil and gas extraction increased by 2.1%, while oil sands extraction grew by 2.7% as facilities in Alberta continued to ramp up production. The mining and quarrying subsector also noted gains in January, growing by 3% as mining activity increased.
Canada’s construction sector continues to remain strong amid the pandemic, marking the third increase in four months after activity rose by 1.4% in January. Residential construction was up by 3.1%, repair construction increased by 1.4%, and non-residential construction was up 0.1%.
Retail trade on the other hand, declined for the third time in the past four months, falling by 1.7% in January. Nine of the 12 subsectors all noted declines, as ongoing stay-at-home orders and non-essential business closures remained in place at the beginning of the year. Similarly, accommodation and food services also noted a decline, falling by 3% in January, following a contraction of 6.7% in in the month prior.
Statistics Canada also released a preliminary print for the month of February, which suggests economic activity continued to increase, albeit at a slightly slower pace. Early data suggests Canada’s economy expanded by 0.5% in February, with retail trade, construction, and real estate and rental and leasing contributing to the increase.
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.