Canadian economy shows small gain in February, growing 0.4%

Statistics Canada estimates the economy grew at an annualized rate of 6.5 per cent in the first quarter of the year.

The preliminary estimate for the first three months of the year compares with growth at an annualized rate of 9.6 per cent over the last three months of 2020.

Statistics Canada said Friday the economy grew 0.4 per cent in February and estimated growth of 0.9 per cent for March.

Service industries that have been hard-hit through the course of the COVID-19 pandemic showed a small gain in February, while goods-producing industries had a small contraction for the first time since last April.

With the gain in February, overall economic activity was about two per cent below the levels seen pre-pandemic in February 2020.

Taking into account the preliminary numbers for March, Statistics Canada estimates the economy last month was roughly one per cent below pre-pandemic levels.

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Statistics Canada will finalize numbers for March and the first quarter of the year in June.

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February showed a division between goods-producing and service sectors, as retail jumped after two months of decreases as public health restrictions eased in much of the country, offset by declines in mining and gas extraction for first time in six months.

Manufacturing, too, pulled back 0.9 per cent in February after posting a 1.5 per cent increase one month earlier in January.

Retail trade jumped 4.5 per cent after two months of decreases.

Clothing, sporting goods, hobby, book and music stores saw double-digit increases in activity, alongside furniture and home furnishing stores as part of a trend of spending on household goods as Canadians continued to stay home.

Similarly, construction was up in February, as were sales from store selling building materials and garden equipment.

Accommodation and food services grew 3.5 per cent in February after five months of declines as restaurants and bars benefitted from an easing of restrictions.

But in the last few weeks, rules have tightened in much of the country to combat rising case counts during the third wave of the pandemic.

CIBC senior economist Royce Mendes said in a note that the third wave should reverse much, if not all of the recent progress in high-contact service industries.

“The good news is that the data for the lull in between waves reveal how quickly Canadian activity can bounce back when the virus is contained,” he wrote.