Economy

Economy seen strong in first quarter, but impact of third wave looms

Published

3 years ago

April 30, 2021

By Julie Gordon

OTTAWA (Reuters) –Canada‘s economy likely grew by 6.5% on an annualized basis in the first quarter, Statistics Canada said on Friday, though economists warned that the current third wave of COVID-19 infections will weigh in the second quarter.

In a preliminary estimate, Statscan said the economy likely grew by 0.9% in March from February. In February, the economy expanded 0.4%, a 10th consecutive monthly gain, on a rebound in retail trade and on the strength of residential construction.

That was slightly below analyst estimates that gross domestic product would grow by 0.5% in February from January.

The gains, as some controls were eased between the second and third waves of COVID-19 virus spread, put Canada‘s first-quarter GDP growth in line with the U.S., said economists. This despite more restrictions and a slower vaccine rollout.

By March, economic activity was likely only about 1% below pre-pandemic levels, Statscan said. But lockdowns imposed in April to curb a another surge in COVID-19 infections will weigh in the coming months.

“Much if not all of the recent progress in non-essential high-contact services industries will likely be reversed during this third wave,” said Royce Mendes, senior economist at CIBC Economics, in a note.

“We’ll have to wait and see how much pain will be inflicted by this latest rise,” he added.

Still, the strength of February and March, where activity rebounded from restrictions imposed in December to deal with the second wave, show how quickly the economy can bounce back.

“The solid performance of many sectors through the winter suggest that any setback in April will likely be quickly recouped in future months,” said Doug Porter, chief economist at BMO Economics, in a note.

The Bank of Canada said last week that it now expects the Canadian economy to grow by 6.5% in 2021 and signaled it could start hiking interest rates as soon as late 2022.

The Canadian dollar held near an earlier 3-year high of 1.2266 per U.S. dollar, or 81.53 U.S. cents, up 0.1% on the day.

(Reporting by Julie Gordon in Ottawa, Additional reporting by David Ljunggren and Fergal Smith; editing by Jason Neely, Steve Orlofsky and Louise Heavens)

Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

12 hours ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

1 day ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

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Economy

Statistics Canada says manufacturing sales fell 1.3% to $69.4B in August

Published

2 days ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.

The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.

The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.

Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.

Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.

Overall manufacturing sales in constant dollars fell 0.8 per cent in August.

This report by The Canadian Press was first published Oct. 16, 2024.

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