Statistics Canada says the economy saw its largest monthly drop on record in April as it came to a near standstill due to the pandemic, but early indications point to a rebound in May as businesses began to reopen.
The agency said Tuesday gross domestic product fell 11.6 per cent in April with non−essential businesses shut for the full month following a 7.5 per cent decline in March.
However, Statistics Canada said its initial flash estimate points to growth of three per cent in May. The estimate will be revised and finalized at the end of July.
Economists on average expect a drop of 13 per cent for April, according to financial markets data firm Refinitiv.
Manufacturing was down 22.5 per cent in April as many factories either shuttered or greatly reduced capacity in line with public health measures to slow the spread of COVID−19 — a move that hit the automotive sector hard as the output of motor vehicles plunged 97.7 per cent.
Even sectors that had increases in March weren’t spared in April like food manufacturing, which dropped 12.8 per cent in April as outbreaks at meat processing plants forced them to shut down.
The accommodation and food services sector dropped 42.4 per cent in April, as customers replaced eating out with staying in, hitting a sector that saw a 37.1 per cent decline in March.
Output from bars and restaurants in particular plunged 40.8 per cent as local and provincial states of emergency forced their closure, or limited operations to take−out and delivery.
Accommodation services fell 45.7 per cent, Statistics Canada says, owing to restrictions on travel between provincial and international borders.
And then there was sports.
As COVID−19 iced the National Hockey League season and put the National Basketball Association, Major League Baseball and Major League Soccer on the sidelines, the arts and entertainment sector declined 25.6 per cent, further affecting companies in the accommodation and food services sectors.
Down too was construction by 22.9 per cent, concentrated largely in Ontario and Quebec, while a similar decline was noted in retail trade as brick−and−mortar stores stayed closed and consumers spent less while staying at home.
Poring through the data, Statistics Canada noted a jump in output of 17.3 per cent from online shopping as households shifted their shopping habits.
The silver lining in the horrible April numbers may be that it marked the bottom of this short but extremely deep recession, CIBC chief economist Avery Shenfeld said.
In a note, he wrote that the flash estimate for May is roughly half of what was expected, but the rebound may be more robust in June with more economic reopenings taking place.
“But thereafter, repairing the rest of the March and April wreckage will be a slower process, as recent COVID−19 flare ups here and elsewhere are showing the hazards of moving too far ahead of the virus,” he wrote.
“Markets were expecting the April news, and we can’t tell if the flash estimate for May will be treated as a disappointment.”
© The Canadian Press