The Conference Board of Canada economist Liam Daly offers insights on the latest Gross Domestic Product (GDP) data:
Real GDP growth decelerated to 0.4 per cent in October as the second wave of the pandemic drained energy from the recovery. A notable slowdown in manufacturing contributed to this result, as well as a further decline in the accommodation and food services industry. Given the latest round of business closures and rising case numbers, significant progress in the near term remains impossible for a few industries, while elsewhere, remote work allows others to adapt, recover and grow.
- Real GDP increased by 0.4 per cent in the month of October in line with our national forecast. While not unexpected, this reflects weaker growth than the previous month’s 0.8 per cent rise. Preliminary estimates by Statistics Canada point to economic growth of 0.4 per cent in November.
- Total economic activity is now only 4.2 per cent shy of the levels seen prior to the pandemic in February. Output of goods-producing industries climbed by 0.1 per cent, while service-producing industries saw an increase of 0.5 per cent.
- The agriculture, forestry, fishing and hunting sector grew by 1.6 per cent adding a third consecutive month of growth, which leaves output 6.3 per cent above pre-pandemic levels. After posting strong growth in the previous month, the mining, quarrying, and oil and gas extraction sector stalled this month, as output was virtually unchanged.
- After contracting in September, construction output grew by 0.7 per cent in October to reach the highest level since June. Manufacturing output, which has grown each month since the recovery began in May, contracted by -0.8 per cent in October and remains 4.2 per cent smaller than the level recorded in February. The slowdown can be attributed to durable manufacturing industries, in which GDP fell for the first time since May, dropping by -2.5 per cent.
- Growth in the retail trade sector slowed in October to 0.3 per cent, leaving output 2.5 per cent higher than pre-pandemic levels in February. In the wholesale trade sector, output grew by 0.8 per cent bringing output to within one per cent of pre-pandemic levels.
- The professional, scientific and technical services sector grew by 1.0 per cent. Continuing a trend of slowing growth; the sector has yet to eclipse the levels seen prior to the pandemic. Elsewhere, finance and insurance as well as real estate and leasing sectors both added a sixth consecutive month of growth in October, having risen above pre-pandemic levels by July.
- The accommodation and food services industry continued to struggle as output contracted for a second consecutive month, this time by 3.9 per cent. The industry remains a long way off its pre-pandemic level and seems unlikely to recover any significant ground before the end of the year. The arts, entertainment and recreation industry, which has also been pummelled by the pandemic, grew by 3.8 per cent, a similar increase to the previous month. While this is welcome news, the output of this industry remains 43.6 per cent below pre-pandemic levels.
- The public sector grew by 0.7 per cent as both the educational services sector and the health care and social assistance sectors grew. In addition, public administration grew by 0.4 per cent, bringing it to within a per cent of pre-pandemic levels.
- Among other industries, the transportation and warehousing sector still has a lot of ground to recover as does the administrative and support, waste management and remediation services sector. With neither sector recording monthly growth above 1 per cent, the pace of recovery is slow and the distance that remains is far.