Economic growth stalled in February

Economic growth in Canada stalled in February ahead of the collapse in March due to the Covid-19 pandemic, Statistics Canada said Thursday.

The agency said real gross domestic product was essentially unchanged for the month as it was hit by teacher strikes in Ontario and rail blockades across many parts of the country.

The educational services sector fell 1.8% in February due to rotating strikes by Ontario teachers, while the transportation and warehousing sector pulled back 1.1% due to rail blockades across many parts of the country and a train derailment near Saskatoon.

Excluding these two sectors, Statistics Canada said the economy would have grown 0.2% in February.

In a preliminary estimate for March released earlier this month, the agency said the economy posted a 9% decline for the month as business came to a standstill due to measures taken to slow the spread of the pandemic.

TD Bank senior economist Brian DePratto said the February data offer a chance to reflect on how quickly the pandemic has changed things.

“Real estate has gone from running hot to virtual stasis in less than a month’s time, and the necessary hit to sectors like accommodation and food services and arts, entertainment and recreation will be historically unprecedented,” he wrote in a brief report.

“Fortunately, with economic re-opening plans starting to take shape across the country, there is a little bit of light beginning to form at the end of the tunnel.”

Overall, 13 out of the 20 sectors tracked by Statistics Canada increased in February.

Goods-producing industries edged up 0.1% for the month, while services-producing industries remained essentially unchanged.

Real estate agents and brokers saw an increase of 5.9% in February, the largest uptick since December 2017, while the mining, quarrying, and oil and gas extraction sector rose 0.9%.

The manufacturing sector contracted 0.2% in February and accommodation and food services fell 0.9% in the month as travel restrictions around the world expanded.

Royal Bank senior economist Josh Nye said April is expected to show a sharp decline as the measures taken to slow the spread of Covid-19 will have been in place for the entire month.

“Whatever the number, we think it will tee up for an unprecedented decline in Q2 GDP,” Nye wrote.

A survey from Statistics Canada on Wednesday, suggested that more than half of Canadian businesses have seen a drop in revenue of at least 20%, while nearly a third have seen a drop of 40% or more.

The results were from an online survey this month done in tandem with the Canadian Chamber of Commerce.

The official estimates of GDP for March and the first quarter of 2020 will be released on May 29.