As much of Canada has been making efforts to recover from the devastation brought on by the coronavirus pandemic, it appears that there is a light at the end of the tunnel after all. According to latest figures released by Statistics Canada, nearly half of the country’s losses stemming from March and April have been regained in May and June.
Canada’s GDP increased by 4.5% in May, with a flash estimate of a further increase of 5% for June. Overall, the previous two months have accounted for a total GDP increase of 10%, after declining over 18% during the height of pandemic-mitigating measures. The latest report reiterates that Canada has been rapidly rebounding from the historically sharp contraction, but concerns still remain regarding whether or not the economic revival can be sustained.
The construction industry posted a rebound of 17.6%, giving rise to the sharpest monthly increase since 1961. Retail trade rose by 16.4%, which were predominantly pushed by record rebounds of 68.9% in motor vehicle part sales. Food services, which were hit relatively hard by the pandemic, have rebounded by 24.2% in May; however, accommodation continues to decline by 2.3%, as there continue to be international travel restrictions in place.
Nonetheless, Statistics Canada’s flash estimate for June suggests that approximately 90% of February’s output levels have been recovered thus far. Conversely, output levels in April were about 82% of pre-pandemic levels. According to calculations by Bloomberg however, the second quarter GDP levels point to a annualized contraction of nearly 40%, which is still higher than second quarter results of 32.95 south of the border.
Although such a decline for Canada’s economy was anticipated, the third quarter may fare better results than the US. Given that Canada took stringent and proactive measures early on in the pandemic, infection rates have been relatively kept under control, paving the way for a smoother recovery.
Information for this briefing was found via Statistics Canada and Bloomberg. 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.