Statistics Canada building and signs are pictured in Ottawa on Wednesday, July 3, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Statistics Canada building and signs are pictured in Ottawa on Wednesday, July 3, 2019. THE CANADIAN PRESS/Sean Kilpatrick

Better-than-expected Jan. growth a good sign for pandemic’s third wave: economists

The shadow hanging over the economy now is COVID-19 and its variants that are pushing up caseloads

The Canadian economy grew 0.7 per cent in January in the face of severe public health restrictions, and appears to have grown almost as much in February, Statistics Canada said Wednesday.

January’s reading for real gross domestic product compared with a gain of 0.1 per cent in December, and topped the data agency’s preliminary estimate for the month of 0.5 per cent.

It was the ninth consecutive monthly increase since the plunge in the economy last year at the start of the pandemic in March and April when workers were ordered home and non-essential businesses forced to close.

Almost one year later, Statistics Canada said that total economic activity was still about three per cent below the February level last year, before the pandemic began.

The agency’s preliminary estimate for February this year showed growth of 0.5 per cent for the month.

TD Bank senior economist Sri Thanabalasingam said January was a solid month for the Canadian economy, despite the tighter public health restrictions in Ontario and Quebec, reflecting what he called the “growing resilience of the economy to the pandemic.”

“With Statistics Canada projecting continued growth in February, the first quarter of 2021 is shaping out to be a very good one for Canada,” Thanabalasingam said.

The Bank of Canada recently revised its expectations for the first quarter of the year, saying earlier this month that the economy should overall grow, rather than contract as it expected in January.

With early indicators suggesting improved business and consumer confidence for March, total annualized growth for the quarter appears to be on track to hit or exceed five per cent, RBC economist Claire Fan wrote in a note.

The shadow hanging over the economy now is COVID-19 and its variants that are pushing up caseloads across the country, placing pressure on provinces to tighten restrictions once again.

BMO chief economist Douglas Porter said the better-than-expected economic picture in January, even as the country shed more than 200,000 jobs, suggests sectors will be able to manage through any third-wave lockdowns or restrictions in the coming weeks.

But he cautioned that some sectors are going to feel the pain more than others. Arts and entertainment is half of what it was one year ago, he said, while hotels and restaurants are about 40 per cent below pre-pandemic activity.

Large sectors like construction and manufacturing are down about one per cent from a year ago, Porter said.

“This is the ultimate definition of this so called K-shaped recovery, where the industries at the upper end of the K are basically almost all the way back to where they were before the pandemic began, and those at the bottom of the K are desperately weak,” Porter said in an interview.

“If there’s good news, when things are eventually able to reopen again, you’re going to see a spectacular bounce in those sectors that remain 40 or 50 per cent below pre pandemic levels.”

The growth in January came as goods-producing industries rose 1.5 per cent, while services-producing industries added 0.4 per cent.

Statistics Canada said the wholesale trade sector rose 3.9 per cent in January, more than offsetting a 1.5 per cent contraction in December.

The manufacturing sector grew 1.9 per cent in January to offset a decline of 0.7 per cent in December, while the mining, quarrying, and oil and gas extraction sector grew 2.7 per cent, its fifth consecutive month of growth.

ALSO READ: B.C.’s iconic West Coast Trail to re-open to visitors in June 2021

Craig Wong and Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

North Cowichan councillor Kate Marsh. (File photo)
North Cowichan postpones decision on cell tower placement

But cell tower policy may be developed soon

B.C. provincial health officer Dr. Bonnie Henry speaks at a press conference Monday, April 18. (B.C. Government image)
New COVID-19 cases tick down on the central Island

New cases held to single digits three days in a row

CVRD offices on Ingram Street will remain closed for another 14 weeks after flooding last month. (File photo)
CVRD headquarters closed for another three and a half months

Building significantly damaged during water leak

Victoria police are asking for help locating high-risk missing man Derek Whittaker, last seen in Victoria April 12. (Courtesy of VicPD)
MISSING: Police searching for Derek Whittaker, last seen in Victoria

Whittaker believed to be driving 1994 red Volkswagen Golf

The IIO is investigating after a police dog bit a man during a traffic stop near Ladysmith on April 17, 2021. (Black Press Media stock photo)
IIO investigating after police dog bites man near Ladysmith

RCMP dog bit man during traffic stop on Friday, April 17

In this image from NASA, NASA’s experimental Mars helicopter Ingenuity lands on the surface of Mars Monday, April 19, 2021. The little 4-pound helicopter rose from the dusty red surface into the thin Martian air Monday, achieving the first powered, controlled flight on another planet. (NASA via AP)
VIDEO: NASA’s Mars helicopter takes flight, 1st for another planet

The $85 million helicopter demo was considered high risk, yet high reward

(Photo by Mojpe/Pixabay)
Canadian kids extracting record amounts from Tooth Fairy

Our neighbours in the U.S. receive slightly less from Tooth Fairy visits

Families of two of three workers killed in a train derailment near Field, B.C., in 2019 have filed lawsuits accusing Canadian Pacific of gross negligence. The derailment sent 99 grain cars and two locomotives off the tracks. THE CANADIAN PRESS/Jeff McIntosh
Families of workers killed in Field train derailment allege negligence in lawsuit

Lawsuits allege the workers weren’t provided a safe work environment

(New Westminster Police)
4 youth arrested after 30-person brawl in New Westminster leaves 1 seriously injured

Police are looking for witnesses who saw the incident take place

South Surrey’s Paul Cottrell, who works with the DFO, tows a grey whale out of Semiahmoo Bay Sunday. (Contributed photo)
Dead whale floating near White Rock towed to shore for necropsy

Animal has been dead since at least April 15

Wickaninnish (Clifford Atleo) plays the drum while singing the Nuu-chah-nulth song on the court steps in Vancouver In a picture from April 2018. Photo credit, Melody Charlie.
Five western Vancouver Island First Nations celebrate legal fishing victory

Court ruling confirms Nuu-chah-nulth fishing rights in case dating back to 2003

Sunday’s storm rocked one of the ferries crossing Kootenay Lake. Photo: Dirk Jonker
VIDEO: Storm makes for wild ferry ride across Kootenay Lake

The video was captured by ferry employee Dirk Jonker

Dr. Bonnie Henry gives her daily media briefing regarding Covid-19 for the province of British Columbia in Victoria, B.C, Monday, December 7, 2020. THE CANADIAN PRESS/Jonathan Hayward
Toddler marks youngest British Columbian to die related to COVID-19

Child one of eight people to die from virus this weekend

Chakalaka Bar & Grill remains open in defiance of orders from Island Health to close. (Cole Schisler photo)
Island Health seeks injunction against restaurant defying COVID-19 orders

VIHA says Ladysmith-area Chakalaka Bar and Grill also violating water and sewer regulations

Most Read