Canada's economy grew at a 6.5% pace to start 2021, slightly faster than U.S. did
Hard-hit sectors like retail and food are starting to bounce back
Canada's economy expanded at a 6.5 per cent pace in the first three months of 2021, as the service sector is showing signs of coming out of the COVID-19 doldrums even as large parts of goods-producing industries are still lagging.
Statistics Canada reported Friday that Canada's gross domestic product expanded by 0.4 per cent in February alone. That came on the heels of a larger 0.7 per cent spike in January. But coupled with preliminary data for March showing 0.9 per cent growth, that puts Canada on track for healthy growth for the quarter as a whole.
U.S. numbers out Thursday showed the American economy expanded by a bit less over the same time frame, at a 6.4 per cent expansionary pace.
"So, even with much more forceful restrictions, a slower vaccine roll-out, and without the help of the two mega U.S. stimulus packages at the start of the year, somehow the Canadian economy matched the U.S. step for step through the winter months," Bank of Montreal economist Doug Porter said of the numbers. "That is impressive."
March's numbers are preliminary, so they may change in an update next month. But February's numbers are now final and they paint a picture of an economy having an uneven convalescence from the COVID-19 pandemic.
Fourteen of the 20 industries the data agency tracks posted gains, including sectors hit hard by the first waves of COVID-19, including retail and food and accommodation.
Retail sales jumped 4.5 per cent, following two months of contraction in December and January as lockdowns started up again.
The food and accommodation sector has been walloped by COVID-19 shutdowns, but it expanded by 3.5 per cent. That's the first monthly increase since August 2020.
On the flip side, manufacturing shrank for the second month in a row, this time by 0.9 per cent. And mining, quarrying and oil and gas contracted by 2.8 per cent, while transportation shrank by two per cent.
While it was encouraging to see overall growth picking up after a 2020 that ended up being the worst year on record for Canada's economy, economist Sri Thanabalasingam with TD Bank said the numbers still show how long and slow the recovery from COVID-19 will be, as the virus is still very much affecting Canada's economy.
"February, and even March, seem like a long time ago don't they?" he said in a note to clients after the numbers came out.
While vaccination efforts are ramping up and offer hope that things can get back to normal sometime this summer, "this timeline is uncertain. What's more certain is that the next phase of the recovery will require vaccines to gain the upper hand on the virus. Fingers crossed this happens sooner rather than later."