Lockdowns didn’t stop national growth in January: Conference Board of Canada report
By Ground Water Canada
By Ground Water Canada
Ottawa – The Conference Board of Canada’s Economists Kiefer Van Mulligen and Liam Daly offer the following insights on the latest Gross Domestic Product (GDP) data:
“Amid stricter lockdowns in Ontario and Quebec, Canada’s real GDP managed to post growth of 0.7 per cent in January. With a preliminary estimate of 0.5 per cent growth for February, this suggests that first quarter growth will be stronger than expected in our most recent national forecast. Notable month-over-month gains were made in both the wholesale trade and resource extraction industries. Overall, the country’s economic recovery forged ahead, though output remained at 97.4 per cent of its pre-pandemic level.”
- Goods-producing industries grew by 1.5 per cent in January. This growth was primarily driven by solid performances in the mining, quarrying, and oil and gas extraction industry (up by 2.7 per cent) and the manufacturing industry (up by 1.9 per cent).
- The construction sector posted a second consecutive month of growth in January, expanding by 1.4 per cent in the wake of significant fluctuations throughout 2020.
- Amid the roaring Canadian housing market, the majority of activity in the construction sector took place in the residential building construction subsector (up by 3.1 per cent for the month).
- The manufacturing sector covers a vast range of subindustries that have fared differently under ongoing pandemic restrictions. On balance, the sector’s solid growth in January was led by the plastic product manufacturing subsector (up by 11.1 per cent). Among all subsectors, motor vehicle manufacturing posted the largest absolute decline.
Amid the roaring Canadian housing market, the majority of activity in the construction sector took place in the residential building construction subsector.
- Amid strong housing demand and high wood product prices in the United States and Canada, output in the forestry and logging industry grew by 2.6 per cent in January. The industry has posted consecutive monthly growth since July of last year.
- Activity in the Alberta oil sands ramped up in January, which led to a 2.7 per cent increase in output for the industry. Overall, the oil and gas extraction sector grew by 2.1 per cent.
- Overall service-producing industries posted modest growth of 0.4 per cent in the month of January, understandable given tightened regimes in several provinces. This is in line with our forecast for the first quarter of 2021. The data shows continued polarization among service sectors depending on their ability to accommodate remote workers.”
- Closures of retail outlets in Ontario and Quebec weighed heavily on output within the retail trade industry as output fell by 1.7 per cent. This follows a significant contraction in the previous month.
- In contrast, wholesale trade was one of the strongest industry performers recording growth of 3.9 per cent. This was largely driven by demand for building materials and supplies to support booming residential construction.
- The accommodation and food services industry suffered a fourth consecutive month of decline as output contracted by 3.0 per cent in January. This adds further misery to a sector once again brought to its knees by the pandemic.
- Among high-wage service industries, remote working continues to provide insulation from the effects of the pandemic. Both the professional and financial services industries grew in the month of January, offsetting the small declines in both industries in December.
- For the transport and warehousing industry, the picture is mixed. Services used to transport commuters has once again been decimated by directives, in some provinces, to work from home where possible. Urban transit systems are particularly at risk from such restrictions, evidenced by a contraction of 28 per cent in the month of January. Growth of 5.6 per cent among taxi and limousine services demonstrates a shift in preference towards private vehicles during times of increased COVID-19 risk.
- The public sector grew by 0.3 per cent supported by growth in the education and healthcare sectors. This is despite a 0.4 per cent fall in output in public administration driven largely by a contraction in local, municipal and regional public administration.