Canada's economy was slowing even before COVID-19 hit, January GDP numbers show
Transportation, retail and oil and gas sector were contracting
Canada's economy expanded by 0.1 per cent in January as manufacturing and the financial sector grew while transportation, mining, oil and gas and the retail sector all shrank.
Statistics Canada reported Monday that Canada's gross domestic product expanded by 0.1 per cent during the month, slightly less than what economists were expecting. It's also less than the 0.3 expansion seen in the previous month.
The spectre of COVID-19 was already casting a shadow on the economy in January as reduced trade with China and travel restrictions held back Canada's economy two months before the full brunt of the outbreak hit North American shores.
Manufacturing grew by 0.8 per cent during the month, while construction activity picked up by 0.2 per cent from December's level. Wholesale trade grew by 1.2 per cent while the financial sector expanded by 0.9 per cent.
On the downside, the mining and oil and gas sector shrank by 0.6 per cent, while the retail sector was down by 0.4 per cent. The transportation sector shrank most of all, by 1.7 per cent, largely because of winter storms wreaking havoc with travel plans.
Bank of Montreal economist Benjamin Reitzes did note expansion in one sector that he thinks could be poised to continue in the coming months. "One sector that picked up steam with its biggest gain in a year is public administration," he said. "Expect a lot more of that as the federal and provincial governments step in to support the economy through the COVID-19 shock."
"January numbers are ancient history now given how the economic landscape has drastically shifted," he said. "While the year got off to a decent enough start, the near-total halt in activity in the second half of March will have a hugely negative impact."