The Conference Board of Canada’s Economist Kiefer Van Mulligen offers insights on the latest Gross Domestic Product (GDP) data:
“Following a 6.5 per cent jump in June, real GDP grew by 3.0 per cent in July. This slower pace of recovery is in line with estimates from The Conference Board of Canada’s latest national forecast. While a continued recovery back to pre-pandemic levels of output is promising, real GDP still lies six per cent below its February level. With the number of new COVID-19 cases climbing in many provinces, further economic recovery is expected to continue at a much more moderate pace.”
- Real GDP grew by 3.0 per cent in July following a 6.5 per cent increase in June. This was in-line with expectations and a preliminary estimate for July offered by Statistics Canada last month. Goods-producing sectors saw a monthly increase of 3.2 per cent in July after a 7.8 per cent increase in June. Service-producing sectors grew by 3.0 per cent following their 6.1 per cent expansion in June.
- Most industries remained below their pre-pandemic levels of output in July. Notably, agriculture, utilities, real estate rental and leasing, and finance and insurance surpassed their February levels. Retail trade, which grew by 21.1 per cent and surpassed its pre-pandemic level in June, grew by only 0.4 per cent in July.
- Manufacturing posted gains of 5.9 per cent in July following a more robust 15.1 per cent recovery in June. Both durable and non-durable manufacturing drove this growth, expanding by 5.7 per cent and 6.2 per cent, respectively. Notable monthly gains were made in motor vehicles and parts manufacturing (which grew by 24.0 per cent). Aerospace product and parts manufacturing grew by 5.6 per cent but remains 11.3 per cent below its level last year.
- The contraction in the tourism industry was found to have been six times larger than the economy as a whole, falling by 66.4 per cent in the second quarter of 2020. Amid continuing social distancing rules and travel restrictions, accommodation and food services grew by 20.1 per cent in July. Despite three consecutive months of solid recovery as these restrictions have gradually been lifted, these industries remain subdued. Accommodation services remained 41.5 per cent below year-ago levels, and food services and drinking places lingered at 29.2 per cent below their July 2019 levels.
- Driven by growth in all of its subcomponents, transportation and warehousing grew by 5.7 per cent in July. Most notably, air transportation grew by a seemingly staggering 55.5 per cent. However, the subsector is still 91.6 per cent below its level in July 2019 and remains hobbled by COVID-19 restrictions.
- Construction activity increased by a modest 0.6 per cent in July. Although non-residential building construction fell by 3.0 per cent, this was more than offset by gains in residential building construction and repair construction.
- The mining and quarrying (except oil and gas) sector shot up by 10.8 per cent in July. This growth was primarily driven by expanded potash mining (which increased by 44.9 per cent) and higher copper, nickel, lead and zinc ore mining. Oil and gas extraction continued to decline, falling by 2.9 per cent in July.
- Statistics Canada also provided a preliminary estimate for August GDP which is currently projected to have increased by approximately one per cent. With the number of new cases of COVID-19 climbing in many provinces, further economic recovery is expected to continue at a much more moderate pace than what has occurred from May through August.