Marking the first full month of measures put in place by the federal government to deal with the COVID-19 pandemic, Canada’s gross domestic product (GDP) dropped 11.6% in April, year-over-year.
Calling this an “unprecedented economic situation brought on by the COVID-19 pandemic,” Statistics Canada said this is the largest monthly drop since it started recording this data in 1961.
April 2020’s decline follows a 7.5% drop in March. For comparison, the largest decline during the Great Recession was 1.4% in December 2008.
TD Economics’ Omar Abdelrahman said there may be a light at the end of the tunnel, however.
“The good news is that April’s severe contraction likely marks the low point of the COVID-19 downturn,” he said.
Abdelrahman pointed to an “upside surprise” in May’s labour force survey, as well as consumer spending, which he said confirm a “gradual recovery narrative.”
“That said, caution remains the watchword going forward. As discussed in our latest Quarterly Economic Forecast, we have noted that a long, uphill journey will be needed to return to normal. Statistics Canada's conservative 3% nowcast (although subject to revisions) for May indicates there is still a long road to recovery ahead of us.”
April 2020 declines were seen across all 20 industrial sectors. All subsectors of the manufacturing sector contributed to a 22.5% drop in this area. The accommodation and food services sector contracted 42.4% in April after shrinking 37.1% in March. Other notable drops were seen in:
- Construction (22.9%);
- Retail trade (22.9%); and
- Whole sale trade (17.9%).
Stats Canada said the latest figures are preliminary, and the estimate will be revised July 31 on the release of May’s data.