Issue 20-99: Gross Domestic Product

May 29, 2020

Canadian real GDP by industry at basic prices contracted 7.2% with 19 of the 20 industries observing declines in March.

This was the largest monthly decline since the series began in 1961, as many non-essential businesses, schools and public institutions were forced to close due to the COVID-19 pandemic.

To provide more timely economic information during the pandemic, Statistics Canada has released a very early estimate of GDP growth for April.  According to preliminary information, the agency is indicating an 11% reduction in real GDP in April. Though subject to revision, Statistics Canada expects March and April to represent the largest consecutive monthly declines on record.

GDP in goods-producing industries fell 4.6%. Leading the decline were manufacturing (-6.5%) and mining, quarrying & oil & gas extraction (-5.0%), while construction fell at a slightly lower pace (4.4%). Agriculture, forestry, fishing & hunting was essentially unchanged although slightly lower in absolute terms. Utilities (+0.4%) was the only sector that advanced in March.

Services-producing industries were the most affected by social-distancing measures. Services-producing industries were down (-8.1%) with all sectors reporting losses. GDP in arts, entertainment & recreation (-41.3%), accommodation & food services (-36.9%), transportation & warehousing (-12.2%) and retail trade (-9.6%) fell significantly due to mandatory closures in the second half of March. Public sector industries (education, health care and public administration) (-9.4%), professional, scientific and technical services (-8.6%), wholesale trade (-5.1%), finance and insurance (-1.0%) and real estate and rental and leasing (-1.0%) all posted declines in March.

Finance and insurance and real estate and rental and leasing saw the smallest declines in March, likely due to increased activity in financial markets as investors coped with stock market sell-offs, and the protracted nature of real estate purchase agreements which may have been signed before social-distancing measures were put into place.

Real GDP for goods-producing industries (-1.1%) and service-producing industries (-2.4) were down in the first quarter of 2020. Losses were widespread across all industrial sectors, except real estate and rental and leasing (+0.3%).

When looking at the expenditure accounts, real GDP at market prices fell 2.1% in the first quarter of 2020, an annualized 8.2%. Every category of expenditure saw declines, except for gross fixed capital formation (investment) by general governments (+1.1%) and intellectual property products (+0.3%).

Household spending was down 2.3% in the first quarter of 2020 (an annualized 9.0%), the biggest quarterly drop on record. Exports fell 3.0% and imports declined 2.8% with trade stalling as public health measures were established by Canada’s closest partners.

Source: Statistics Canada