Canada GDP: How the economy fared in April amid lockdowns

·2-min read
TORONTO, ONTARIO, CANADA - 2021/04/08: 'Store For Lease' sign seen on a window of closed downtown store. 
Toronto and Province of Ontario are in the third lockdown in a year, battling against new variants during the COVID-19 pandemic. (Photo by Shawn Goldberg/SOPA Images/LightRocket via Getty Images)
'Store For Lease' sign seen on a window of closed downtown Toronto store. (Getty Images)

Canada's economy contracted in April amid COVID-19 restrictions.

Statistics Canada says the 0.3 per cent GDP decline follows 11 straight monthly increases.

Of the 20 sectors, 12 of them were lower. Total economic activity stands at 1 per cent off the pre-pandemic level in February 2020.

However, the contraction isn't as steep as the previous forecast of 0.8 per cent.

"Pain over the period was again focused in hard-to-distance services, as it was during prior waves of the virus. However, sectors such as construction and mining and quarrying showed strong gains in April," said CIBC senior economist Royce Mendes.

"The good news for services most impacted is that, with a reopening already underway across many regions of the country, those businesses should be the ones leading the economy higher this summer."

A preliminary flash estimate by Statistics Canada points to a 0.3 per cent contraction for May.

Mendes says the data point to a growth rate of around 2 per cent annualized in the second quarter.

After struggling out of the gate, Canada has made up a lot of ground on the vaccine front and COVID-19 cases have been trending down with reopening plans underway. Cambridge Global Payments chief market strategist Karl Schamotta expects a strong rebound.

"First-dose vaccination rates in Canada are poised to close the gap with the U.S., and social-distancing restrictions are being rolled back across the country," said Schamotta.

"All indications suggest that services spending is roaring back to life, and that economic data prints are likely to improve substantially in the months ahead."

Statistics Canada says it will revise the flash estimate on July 30 when it releases the official GDP data for May.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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