As economic data continues to accumulate amid the coronavirus pandemic, the severity of Canada’s economic slump has come into focus. According to recent data released by Statistics Canada, GDP decreased by 11.6% in the month of April, compared to a drop of only 7.5% in March. Given that April was the first entire month that shutdown and social distancing measures were fully enforced, almost all of Canada’s sectors suffered a decline in output.
As a means of mitigating the spread of the coronavirus, many factories around the country either temporarily closed their doors or continued to operate but at a much reduced capacity for the month of April. The resulting data shows that Canada’s manufacturing sector is down by 22.5%, while the transporting and warehouse sector fell by 23.1%, and air transportation decreasing by an alarming 93.7% in response to dwindling demand for air travel and increased restrictions.
Just as manufacturing and transportation suffered drastic declines, so did the retail trade industry and construction industry, with output in both sectors falling by 22.9%. in the same month. During the onset of the pandemic, consumer demand for brick-and-mortar stores fell while many were forced to temporarily shut their doors in response to infection mitigation strategies. In the meantime, all construction declined, predominantly lead by non-residential construction which fell by 36%.
The accommodation and food sector also fell by a significant 42.4%, as many establishments were forced to close entirely, or only at very reduced capacities necessary for takeout orders. In addition, many Canadians also refrained from eating out, either due to changes in personal income or strict stay-at-home orders. Accommodation services such as hotels suffered a 45.7% slump, predominantly due to travel reductions at both the domestic and international levels.
Canada’s oil and gas industry has also not fared very well through the pandemic. According to StatCan data, mining, quarrying and oil and gas extraction fell by 9.4% in April, with all sub-sectors suffering an output decline, except for potash, which increased by 9.2%. Not only has the coronavirus pandemic and the resulting drop in global crude demand put a hamper on oil and gas extraction, but the ongoing oil price wars also pose a significant contributing factor.
Although April presented the largest monthly decline in output as far back as records date, StatCan’s preliminary data for the month of May suggests a an economic rebound may be looming. As restrictions are being lifted across many provinces and sectors are gradually reopening to full production, primary indicators suggest there is already a 3% increase in real GDP for May.
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.