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

Supporters gather outside GraceLife Church near Edmonton, Alta., on Sunday, April 11, 2021. The church has been fenced off by police and Alberta Health Services in violation of COVID-19 rules. THE CANADIAN PRESS/Jason Franson
Hundreds gather to support Alberta church shut down for ignoring COVID-19 orders

GraceLife Church and its pastor, are charged for holding services that break health restrictions

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Alberta identifies 1,183 new COVID-19 cases on Sunday

50.5% of all active cases are variants of concern

File photo
A man walks into a Cargill meat processing factory. THE CANADIAN PRESS/Graham Hughes
Alberta meat plant, site of COVID-19 outbreak last year, to get vaccination clinics

Nearly half of the 2,200 workers at the Cargill facility contracted the novel coronavirus and two employees died last April

Grand Chief Wilton Littlechild, left, Grand Chief Arthur Noskey, centre and Chief Aaron Young during a meeting with First Nations Chiefs and Grand Chiefs in Edmonton. THE CANADIAN PRESS/Jason Franson
Alberta must retract Forest Act before it becomes law: Treaty 8 grand chief

‘We are asking (the government) to pull this back and consult with us,’ says Arthur Noskey of Treaty 8 First Nations

People take part in an anti-curfew protest in Montreal on Sunday April 11, 2021. Hundreds of people gathered in Old Montreal tonight in defiance of a new 8 p.m. curfew. THE CANADIAN PRESS/Giuseppe Valiante
VIDEO: Hundreds defy Montreal’s 8 p.m. curfew in violent, destructive protest

Quebec reported 1,535 new COVID-19 cases on Sunday, as well as five additional deaths linked to the virus

A volunteer disinfects a historical Mohabat Khan mosque ahead of the upcoming Muslim fasting month of Ramadan, in Peshawar, Pakistan, Friday, April 9, 2021. (AP Photo/Muhammad Sajjad)
For Canadian Muslims, second pandemic Ramadan is a time of hope and sadness

Many members of the association are trying to find ways ‘to help people stay connected to one another’

Chief Public Health Officer Theresa Tam speaks during a technical briefing on the COVID pandemic in Canada, Friday, January 15, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Canada’s ICUs see near-record of COVID-19 patients last week as variant cases double

Last week, Canadian hospitals treated an average of 2,500 patients with COVID-19, daily, up 7% from the previous week

Vancouver’s park board general manager issued a new order Friday restricting tents and other temporary structures from being set up in Strathcona Park after April 30, 2021. THE CANADIAN PRESS/Jonathan Hayward
Vancouver park board issues order to restrict tents in Strathcona Park

The order issued Friday restricted tents and other temporary structures from being set up after April 30

Stettler’s own Renegade Station is kicking off the spring season with a brand new single - to be released April 9th. (Photo submitted)
A brand new single is on the way from Stettler-based band Renegade Station

Free Free Free hits all streaming platforms on April 9th

Foreign Affairs Minister Marc Garneau waits for a virtual meeting to begin with US Secretary of State Antony Blinken in Ottawa, Friday February 26, 2021. THE CANADIAN PRESS/Adrian Wyld
Ottawa mulls exempting more workers from Canada-U.S. border shutdown: Garneau

Canada-U.S. border has been closed to people travelling for vacations and other non-essential visits since March 2020

A worker smooths concrete at a construction site in Toronto on January 16, 2020. THE CANADIAN PRESS/Cole Burston
Economy adds 303,000 jobs in March, unemployment rate falls: Statistics Canada

Figure released this morning outpaced the 259,000 gain seen in February

FILE - This file photo dated July 10, 1947 shows the official photograph of Britain’s Princess Elizabeth and her fiance, Lieut. Philip Mountbatten in London. Buckingham Palace says Prince Philip, husband of Queen Elizabeth II, has died aged 99. (AP Photo/File)
Prince Philip, husband of Queen Elizabeth II, dies at 99

Philip spent a month in hospital earlier this year before being released on March 16

Campbell River city council will continue its 2020 policy of waiving late fees and NSFs. (Mirror File photo)
53% of Canadians teetering the brink of insolvency: survey

A majority of Canadians admit they’re just $200 away from not being able to pay their monthly bills

Most Read