Canada’s economy has made up almost half of its historic contraction since the height of the pandemic, Statistics Canada reported Friday.
Gross domestic product expanded 4.5 per cent in May, the agency said in its first full release for the month. June was even stronger, with the statistics agency reporting a flash estimate of another five per cent increase. Cumulatively, GDP has increased about 10 per cent in the two months, after falling more than 18 per cent in March and April.
The report confirms Canada’s economy has experienced a sharp recovery since emerging from nationwide lockdowns. At issue is whether the rebound will be sustained. Bank of Canada policy makers have already warned the initial resurgence will probably taper off in the second half.
Based on the flash estimate, economic activity in June was about 90 per cent of output levels recorded in February. At the nadir of the recession in April, output levels were about 82% of pre-pandemic levels.
That’s “still a big gap by any historical comparison, but this also marks a quick rebound,” Brett House, deputy chief economist at Bank of Nova Scotia, said by email.
Even with the May-June increase, the second quarter will go into the books as probably the worst since the Great Depression for Canada’s economy. Based on June flash estimate, economic activity in the quarter was down 12 per cent from the first three months of the year.
U.S. Comparison
That’s about 40 per cent at an annualized pace, according to Bloomberg calculations, which is roughly in line with economists’ projections. South of the border, the U.S. posted a 33 per cent contraction in GDP for the second quarter annualized, the most on record.
“While such a decline was expected, it was worse than what was seen earlier in the week in the U.S. for the same quarter, as Canada enacted restrictions earlier and eased them less aggressively,” Royce Mendes, an economist at Canadian Imperial Bank of Commerce, said in a note to investors. “The good news is that the cautiousness has kept virus cases under control north of the border, suggesting Canada’s economy is in a position to outperform that of the US in Q3.”
Output was up in almost all sub-sectors in May, with double-digit monthly gains by retailers that coincided with the reopening of many stores across the country. Construction, too, recorded a strong rebound, with activity up 18 per cent in the sector.
Oil and gas, and entertainment-related industries continued to shrink.
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.
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.
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.
