Canada's GDP grew 62.3 percent in May!

No, wait, silly me!  That's the annualized rate -- I'm just trying to make a further point relating to the previous post about how the US reports growth data. Actually, Statistics Canada today reported a 4.5 percent increase in real GDP for May, an impressive rebound that still leaves GDP 15 percent below the pre-pandemic level recorded in February.  The recovery was broad-based and reflected the steady opening up of Provincial economies from pandemic lockdowns during the course of the month.

In keeping with its recent practice, StatsCan is also providing preliminary estimates for more recent time periods. It currently estimates that GDP rose by a further 5 percent in June.  That translates into a 12 percent decline in GDP for the second quarter as a whole, somewhat surprisingly a significantly worse showing than in the US, where the decline was 9.5 percent.  StatsCan warns that these figures may be extensively revised when the actual data for both June and Q2 are released on August 28.

Canada's release of monthly GDP data separately from the more conventional quarterly data is unusual. It can seem like overkill, particularly in light of the extreme seasonal influence on all Canadian economic data thanks to the country's extreme weather.  In current circumstances, however, the monthly data are much more useful than the quarterly figures.  Cast your mind back again to the US Q2 GDP numbers.  Not only did the media initially fail to report that the shocking 32 percent decline was an annualized figure -- they also, thanks to the absence of monthly data, were unable to point out that the extreme weakness in the quarter was entirely focused in the month of April.

We are now at the end of July, and it can be confidently asserted that Canadian GDP posted another strong gain in the month, likely topping the May and June reports, as the pace of reopening has noticeably quickened.  A further strong gain is all but baked in for August, which will bring GDP back to within 5 percent of its February peak.  And after that?  Slower and more uneven growth is likely for the balance of the year, especially if the dreaded second wave of COVID materializes. We should also start to get a better handle on which sectors of the economy have been dealt a real hammer blow by the pandemic -- Air Canada's report this morning that its revenues fell 89 percent in Q2 is likely to be the first of many such horrors.