Canada: Economic output plummets at the sharpest pace on record in April
The economy contracted 11.6% month-on-month in April, sharper than March’s 7.5% decrease and slightly worse than Statistics Canada’s preliminary estimate of a 11.0% fall. The economy shrank17.1% year-on-year in April, which was greater than March’s 5.9% drop.
Moreover, on 30 June, Statistics Canada released a special flash estimate of GDP for May to provide a snapshot of the state of the economy. The preliminary figure pointed to a 3.0% increase in activity on a month-on-month seasonally-adjusted basis.
In April, activity in the goods-producing industries decreased notably particularly due to roughly a 23% decline in both the construction and manufacturing sectors. In terms of services-producing industries, the wholesale and retail trade, health care and social assistance, and transportation and warehousing sectors all plummeted in April. Statistics Canada, did not release a breakdown for the month of May.
Going forward, the economy will likely gradually recover in the second half of this year as lockdown measures continue to ease and international borders begin to reopen. Moreover, strong fiscal stimulus and unprecedented monetary easing should also provide support to activity. Nevertheless, oil production cuts and tepid external demand will continue to weigh on the economy. A worsening outlook in the U.S. poses a significant downside risk to the outlook.