| Canada’s economy expanded again in March, probably shrank in April For the first quarter as a whole, the Canadian economy grew at an annual pace of 5.6 per cent. That’s worse than the 6.8 per cent that economists were forecasting, and significantly less than the 9.3 per cent pace of growth that GDP was expanding at to finish off 2020.|
Statistics Canada reported Tuesday that 18 of the 20 parts of the economy it tracks grew during March, for an overall expansion of 1.1 per cent compared to February. Preliminary data for April suggests the economy then shrank by 0.8 per cent.
Retail trade, accommodation and food services look to have born the brunt of April’s decline, as new lockdowns to counter the third wave of COVID-19 hit those parts of the economy hard. But even sectors like manufacturing and real estate seem to have contracted during the month.
“With many restrictions still in place through May, the economy probably did not do that much better in the second month of the second quarter,” TD Bank economist Sri Thanabalasingam said.
As a result, April will likely see the consecutive streak of 11 months of gross domestic product growth come to an end.
With respect to March, management and the utilities sector were the two outliers that did not grow. The housing market was a source of particular strength, with residential construction spending rising 7.6 per cent to $14 billion, while real estate agents and brokers raked in more than $19 billion, an all-time record.
While April’s report could be sobering, most provinces are now seeing vaccination rates rise and restrictions gradually eased.
“The good news is that the worst appears to be behind us,” Thanabalasingam said. “Vaccinations are progressing at an impressive pace, daily caseloads are declining and provinces are beginning to lift restrictions. These conditions will set the stage for a strong rebound in demand.