June makes up for lockdown declines in April and May
Canada’s economy appears to have avoided a contraction in the second quarter, as the most up-to-date data show a strong June more than offset weakness earlier in the spring.
Statistics Canada reported on July 30 that gross domestic product (GDP) decreased 0.3 per cent in May, exacerbating a 0.5-per-cent drop in April. The declines were the direct result of stricter health measures that provinces implemented to control the third wave of COVID-19 infections.
Those restrictions were relaxed in June, and the economy appears to have responded in kind. Statistics Canada said an incomplete tally of economic output last month suggests that GDP surged 0.7 per cent, led by retailers, restaurants and hotels. If June unfolds as the preliminary data suggest, the quarterly figure will work out to annualized growth of about 2.5 per cent, Statistics Canada said.
“The decline in May was almost textbook, with another big drop in retail trade (-2.7%) and food & accommodation (-2.4%), and smaller setbacks in manufacturing and transportation,” Douglas Porter, chief economist at Bank of Montreal, wrote in a note. But, “amid the many moving parts, it now looks like the Canadian economy managed to eke out some modest growth for all of Q2,” Porter wrote.