Great Mortgages. The Right Insurance. Expert Advice.
Canadian Economy at a Glance
BDC Economic Letter – February 2022
The Business Development Bank of Canada (BDC) Source article can be found [HERE]
Canadian economy surpassed its pre-pandemic level in November
Good news: growth continued to strengthen in the final quarter of 2021. Monthly GDP finally reached its pre-pandemic peak in November. However, that was before the Omicron wave hit Canada, forcing the reintroduction of health measures across the country.
Gross domestic product continues to rise
Real gross domestic product rose 0.6% in November on top of October’s solid gain of 0.8%. The growth was broad-based across both goods and services industries. Only three of the 20 industries surveyed by Statistics Canada slowed during the period. This was well above analyst expectations, especially considering the impact of flooding in British Columbia on freight transportation during the month.
Decline in employment: Blame it on Omicron
As expected, the labour market is starting 2022 on a sour note. Employment fell in January, the first national decline in eight months. Once again, job losses were concentrated in the sectors most affected by the pandemic, including accommodation and food services (-113,000), and the arts and culture industry (-48,400).
The losses were concentrated in Ontario (-145,700) and Quebec (-63,000), the provinces that have been the most aggressive in locking down to combat Omicron. The picture should brighten as soon as February with the removal of certain health measures.
Interest rate: Mark your calendar
The stage is set for the Bank of Canada to raise its policy rate for the first time at its meeting on March 2. Inflation hit a 30-year high in December at 4.8%. There was still too much uncertainty about the size and duration of Omicron’s impact on the Canadian economic recovery to raise rates at the January meeting. Data capturing the impact of the latest round of lockdowns will still be scarce by the time the bank has to make its decision in March, but according to the provincial plans the economy should be almost fully reopened by then.