OTTAWA – The Canadian economy appears to have rebounded from its worst two-month period since the start of the pandemic, gaining in June and growing in the second quarter of the year.
Statistics Canada said his preliminary estimate is that real gross domestic product grew at an annualized rate of 2.5% between April and June, bolstered by a 0.7% increase in June as pandemic restrictions eased after declines of 0 , 5% in April and 0.3% in May.
May’s drop put total economic activity about 2% below pre-pandemic levels seen in February 2020. The agency said that with growth in June, total economic activity was d ‘about 1% below pre-pandemic levels.
It may not take much longer to cross the last percent, although some sectors have more time to go than others, said Desjardins chief economist Jimmy Jean.
Restrictions are receding across much of the country as vaccination rates increase, and with early indications suggesting increased activity, the country is expected to experience a fairly strong rebound in the third trimester in the absence of any hiccups, Jean said.
“I think we’ll also talk about the fact that the Canadian economy has fully recovered from its pre-pandemic losses,” he said.
“This is an important step, but I think we also have to remember that we are not there yet when it comes to the labor market. This is where there is still a long way to go. “
The uneven recovery of sectors prompted the federal government to announce Friday that it was extending aid to businesses and workers until October 23 and freezing benefits at current rates.
Speaking in Hamilton, Ont., Finance Minister Chrystia Freeland said the government wants to ensure that small businesses in particular have the support they need for the country to experience a full and solid recovery. .
Friday’s GDP figures beat the Bank of Canada’s forecast earlier this month that the economy would grow at an annualized rate of two percent in the second quarter. The central bank expects the economy to grow at an annualized rate of 7.3% this quarter.
âSpring closures across much of the country triggered the first monthly GDP declines in a year, but those setbacks are expected to be reversed within a relatively short time frame, with the June rebound almost doing the job on its own,â said Douglas Porter, BMO Chief Economist.
For May, Statistics Canada said retail trade fell 2.7% after falling 5.7% in April, with the sector weighed down by restrictions on in-person purchases meant to combat the third wave of COVID-19.
The accommodation and food services sector was also hit by the restrictions and fell 2.4% in May, which was not as bad as the 4.3% drop in April.
Statistics Canada said manufacturing fell 0.8 percent in May, marking the third contraction in four months.
The agency also noted that residential building construction fell 4.2% in May, down for the first time since November 2020, and a 0.4% drop in the real estate sector as activity in resale of homes was slowing down.
“As home sales and construction levels gradually return to more sustainable levels, this sector of the economy may hold back growth in the coming months,” noted Sri Thanabalasingam, senior economist at TD.
Statistics Canada said the easing of public health restrictions in many provinces in June helped turn the tide in sectors dependent on in-person services, such as retail, accommodation and food services, which have all experienced growth.
The agency adds that there were also gains in manufacturing in June, while construction and wholesale trade appear to have contracted.
Figures for June and the second quarter will be finalized at the end of August.
CIBC senior economist Royce Mendes said the economy has a way to recover more ground lost this summer, with virus cases generally low across the country.
“That said, there are still challenges on the horizon, especially in the form of variants of the virus that have slowed progress towards healing in other developed economies,” he wrote in a note.
This report by The Canadian Press was first published on July 30, 2021.