Canada showed 0.4% economic growth in October. What should we expect now?

In October, Canada’s economy expanded by 0.4%, marking the sixth consecutive month of growth after a record decline seen in April.

According to Statistics Canada, the country’s GDP was up due to a 0.1% increase in goods-producing industries, and a 0.5% gain reported in the service sector.

As a result, the overall growth slightly exceeded 0.3% expected by economists.

Such numbers mean that in October, the total value of all economic activity in Canada (on a seasonally adjusted annual rate) was worth about over $1.9 trillion.

Meanwhile, the number was $2 trillion in February, before the pandemic started. So even despite six consecutive months of growth, Canada’s economy is still producing $83 billion less than before COVID-19 hit.

Only manufacturing and the food and accommodation sector reported no growth, still struggling with the consequences of the pandemic.

Statistics Canada also offers a preliminary look at the numbers for November, predicting a 0.4% economic increase. In case it’s true, it means Canada’s economy is still almost 4% below the pre-pandemic level.

Economist Doug Porter with Bank of Montreal believes such numbers for November are better than the October data, as there were concerns over November.

“We shouldn’t forget that November saw new restrictions in several regions, including Toronto. Many were preparing themselves for a significant activity decrease,” – he noted.

“The strong back-to-back increases at the end of the year not only give hope for more optimistic prospects for 2021, but they even may lead to certain reassessment of the damage’s level for 2020”, – Porter added.

However, Sri Thanabalasingam with TD Bank expects the numbers to switch to a less positive path, as we already know how the virus was spreading since October.

“The health and economic situation have changed sharply since October. The spread of the virus has become even more dangerous, and provinces are reacting with new and stronger restrictions,” – Thanabalasingam said. “Lockdowns in Alberta and Ontario are expected to cause economic contraction in December and probably even in January. The economy will be able to recover only when health outcomes improve. And let’s hope it will happen as soon as possible”.