Skip to main content

A server wears a face mask as she works at a restaurant in Montreal on July 5, 2020.

Graham Hughes/The Canadian Press

The Canadian economy notched another outsized gain in July as pandemic restrictions were relaxed, although a second wave of COVID-19 threatens to complicate the recovery this fall.

Real gross domestic product rose 3 per cent in July, after a 6.5-per-cent gain in June, Statistics Canada said Wednesday. In a preliminary estimate, Statscan said GDP rose another 1 per cent in August, a deceleration that was not unexpected after the initial snapback of activity.

With July’s gain, Canadian real GDP is down 5.8 per cent from prepandemic levels in February. Most private-sector forecasters don’t anticipate a full recovery before 2022.

Story continues below advertisement

“The recovery up to now has been a little faster than we expected, and mostly because of consumer spending. Retail activity has really taken off,” said Pedro Antunes, chief economist at the Conference Board of Canada. “The bad news is that [before] we were trying to flatten the COVID curve, and I think now COVID is going to flatten our recovery curve.”

In July, all 20 industrial sectors saw increases in output. Accommodation and food services (20.1 per cent) and arts and recreation (14 per cent) notched the largest percentage gains. Regardless, after brutal declines in March and April, both remain well below precrisis levels.

“With the resurgence in virus cases, the struggles in those sectors could actually deepen further in the near-term,” said Benjamin Reitzes, a Bank of Montreal strategist, in a client note.

Indeed, several provinces have moved to curtail their hospitality industries in recent days to mitigate the spread of the coronavirus, while restaurant and hotel bookings have ebbed since Labour Day. On Monday, the Quebec government ordered bars and restaurants in Montreal and Quebec City to close from Oct. 1 to 28, save for takeout and delivery orders.

“We’re going to see a rough ride for that industry,” Mr. Antunes said.

The manufacturing sector grew 5.9 per cent in July as factories raised production. Within the sector, there were sizable gains for motor vehicles (10.5 per cent), vehicle parts (38.6 per cent) and furniture and related products (13.3 per cent).

Both the finance and insurance (1 per cent) and real estate (1.9 per cent) sectors grew in July, “benefiting from the red-hot housing market and record-low mortgage rates,” Mr. Reitzes said.

Story continues below advertisement

Activity at the offices of real estate agents and brokers surged by 30.6 per cent to reach the highest point since March, 2004. It’s quite likely that August was also strong: a record number of homes were sold that month, the Canadian Real Estate Association recently reported.

The retail sector staged a forceful rebound as lockdowns were eased in May and June and consumers looked to satisfy pent-up demand. More recently, growth has moderated. Retail GDP edged higher by 0.4 per cent in July and is set to decline in August, Statscan estimates.

“Most sectors continued their growth trajectory in August with the exceptions of retail trade and public administration, which pulled back marginally,” the agency said.

Despite the widespread gains in July, the recovery is proving highly uneven. Only five sectors – agriculture, retail, utilities, finance and real estate – registered higher output in July than in February, and seven are down by double-digit percentages.

“Slowing and uneven growth are indications that the Canadian economy is transitioning from the rebound phase to a more challenging stage of the recovery,” said Sri Thanabalasingam, senior economist at Toronto-Dominion Bank, in a client note. “From here on in, the journey to ‘normal’ could see temporary stalls and bouts of turbulence.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies