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Canada’s rapid vaccine rollout this spring enabled economic activity to quickly bounce back from a drop during the third wave of Covid-19 infections, according to the latest reading from BMO Economics’ business activity index.

In a research note, BMO reported that its index, which is compiled from 10 monthly economic indicators, points to a 0.6% rebound in May, reversing a decline recorded in April.

“The main factors behind the quick turnaround were the surprise increase in hours worked, a jump in small business confidence, and a 1.1% rise in wholesale trade based on Statistics Canada’s early indicator,” said BMO.

Additionally, continued gains in the equity market and a rise in housing starts “also helped overcome cooling home sales and another expected drop in retail sales.”

While the onset of the pandemic’s third wave caused a drop in economic activity across Canada in April, “thanks to a faster-than-expected vaccine rollout and continued adaption by business and households, the recovery appears to be back on track,” BMO said.

Yet, the report noted that the quick rebound also highlights the fact that the recovery from the pandemic remains uneven.

“Where activity can occur despite public health measures, it has done so in earnest. For instance, the April payroll numbers show that employment in construction is now running above its pre-pandemic level. However, the recovery still has a long way to go in sectors that rely more heavily on in-person contact, which suffered another setback in April and May,” the bank reported.

Looking ahead, the recovery is expected to continue gaining traction as vaccine rates rise and restrictions drop.

“With most provinces in Canada achieving their vaccination targets for reopening ahead of schedule, restrictions now getting rolled back, and oil prices on the rise, June will likely see a further acceleration of activity,” BMO noted.