The Canadian economy lowered its shoulder through a surge in COVID-19 cases and plunge of 200,000 jobs in January to eke out a 0.2 per cent monthly gain, Statistics Canada said Thursday.
Goods-producing industries drove gains in January, the agency said, noting the construction sector grew for the third time in four months and the largest monthly gain in wholesale trade since July 2020.
Residential construction grew 4.3 per cent in January, which Statistics Canada said more than offset the previous two months of contractions and was the largest monthly gain since March 2021.
The same couldn’t be said for the services sector that as a whole registered zero growth in January.
Accommodation and food services, and the arts, entertainment and recreation sector each saw their largest monthly declines since the first wave of the COVID-19 pandemic in April 2020.
Statistics Canada also reported that mining, quarrying and oil and gas extraction were down for the third month in a row.
The agency said its initial estimate suggests the real gross domestic product grew 0.8 per cent in February, saying that many of the sectors down in January, rebounded a month later.
Royce Mendes, managing director and head of macro strategy at Desjardins, said after plugging away through January, the economy looks to have hit the accelerator in February as services were buoyed by the fading of Omicron and restrictions being relaxed.
Statistics Canada will finalize the February figure at the end of April.
CIBC senior economist Andrew Grantham wrote in an analysis that the surprisingly resilient January figure and early estimate for growth in February puts economic growth for the first quarter ahead of what was anticipated at the start of the year.
He now expects the economy to grow an annualized rate of four per cent in the first quarter, double the two per cent the central bank forecasted in January in its economic outlook.
But Grantham said growth through the remainder of the year is likely to be slower because of the impact of high inflation on household finances, higher interest rates in response that would slow the boom in the housing market, and potential supply chain issues stemming from Russia’s unprovoked invasion of Ukraine.
“Geopolitical conditions are forcing global trade flows to alter and countries are turning to Canada as a reliable, safe supplier of commodities,” said Tu Nguyen, an economist with the firm RSM Canada.
“What that means is that the commodity sectors, such as mining, oil and gas agricultural sectors in Canada are turning around and they are expected to be very strong this year. They have to fill this gap in the global market.”
Nguyen also said businesses like restaurants and bars hard-hit in January should rebound in the coming months as long as the economy stays open and rising costs don’t force price increases that turn away customers.
Higher costs are weighing on small and medium-sized businesses that the Canadian Federation of Independent Business warned Thursday could slow their recovery and return to pre-pandemic sales levels.
The association’s latest survey of its members noted worries about fuel and energy costs, despite results suggesting that their short-term outlook was the most optimistic since the start of the pandemic.
“It’s good to see small business owners express optimism for the future after the last two years of the pandemic,” Andreea Bourgeois, the association’s director of economics, said in a statement. “However, that does not mean they are in a good position to absorb new costs.”
It’s why the association is looking to next week’s federal budget for some relief.
Thursday’s GDP report landed one week before budget day in Ottawa, and underscores expectations that federal finances my be rosier than expected. An economy growing faster than expected could mean the Liberal government finds itself with extra fiscal room on the back of higher revenues and lower-than-anticipated spending on pandemic aid.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
