Canadian industry-level real GDP dropped sharply in April, falling 11.6 percent month-on-month. This follows March’s fall of 7.5 percent decline, leaving the level of real GDP 18.2 percent below its pre-COVID-19 level.
The services sector recorded a major hit of a fall of 9.7 percent. Severe falls were seen in the accommodation and food services, arts, entertainment, and recreation, other services, transportation and warehousing, retail trade and wholesale trade. Activity also fell in the public sector, with healthcare and education GDP falling 10.4 percent and 8.6 percent, respectively. The remainder of the services sector also recorded marked falls. Sectors where work-from-home options were more widespread saw more muted impacts.
The goods sector was particularly hit hard by the health pandemic, falling 17 percent. This showed marked contractions in the construction, manufacturing and mining, quarrying and oil and gas extraction industries. These falls were greatly concentrated in Quebec and Ontario given the restrictions on construction activity and auto plant shutdowns. The sharp decline in oil prices, and the resulting effect on production and oil services in this month drove the contraction in the natural resources sector.
“The good news is that April's severe contraction likely marks the low point of the COVID-19 downturn. Data since then, including the upside surprise in May's Labour Force Survey, mobility reports, and proprietary consumer spending data has confirmed the gradual recovery narrative. That said, caution remains the watchword going forward”, said TD Economics in a research report.