The Canadian economy grew 0.7 percent in January amid severe public health restrictions and appears to have grown almost as much in February, Statistics Canada said on Wednesday.
The January value for the real gross domestic product compared to a plus of 0.1 percent in December exceeded the preliminary estimate of the data agency for the month of 0.5 percent.
It was the ninth straight monthly increase since the economy slumped last year at the start of the pandemic in March and April, when workers had to be sent home and non-essential businesses closed.
Almost a year later, Statistics Canada announced that macroeconomic activity before the pandemic began was still about three percent below its February level a year earlier.
The agency’s preliminary estimate for February this year showed growth of 0.5 percent for the month.
TD Bank senior economist Sri Thanabalasingam said January was a solid month for the Canadian economy, despite tighter public health restrictions in Ontario and Quebec, reflecting what he called “the economy’s growing resilience to the pandemic “designated.
“With Statistics Canada forecast sustained growth in February, the first quarter of 2021 will be very good for Canada,” said Thanabalasingam.
The Bank of Canada recently revised its expectations for the first quarter of the year, saying earlier this month that the economy as a whole should grow rather than contract as expected in January.
With leading indicators pointing to improved business and consumer confidence for March, overall annualized growth for the quarter appears to be on track, reaching or exceeding five percent, RBC economist Claire Fan wrote in a note.
The shadow that now hangs over the economy is COVID-19 and its variants, which are increasing the number of cases across the country and putting pressure on provinces to tighten restrictions again.
BMO’s chief economist Douglas Porter said the better-than-expected economic picture in January, despite the country shedding more than 200,000 jobs, suggests sectors will be able to cope with third-wave lockdowns or restrictions in the coming weeks.
But he warned that some sectors will feel the pain more than others. Arts and entertainment are half what it was a year ago, while hotels and restaurants are about 40 percent below pre-pandemic activity.
Large sectors like construction and manufacturing are down around one percent year over year, Porter said.
“This is the ultimate definition of this so-called K-shaped recovery, with industries at the top of the K stretching back almost to where they were before the pandemic started and those at the bottom of the K are desperately weak,” said Porter in an interview.
“If the news is good, and if things can be reopened at some point, you will see a spectacular boom in sectors that are staying 40 or 50 percent below pre-pandemic levels.”
The growth in January was due to the fact that the goods manufacturing industry rose by 1.5 percent, while the service manufacturing industry rose by 0.4 percent.
According to Statistics Canada, the wholesale sector rose 3.9 percent in January and more than offset a 1.5 percent decline in December.
Manufacturing grew 1.9 percent in January to offset a 0.7 percent decline in December, while the mining, quarrying, and oil and gas exploration sectors grew 2.7 percent for the fifth consecutive month of growth.
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Craig Wong and Jordan Press, The Canadian Press
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