It's an old number but a good one

Statistics Canada reported today that real GDP rose 0.6 percent in November, significantly faster than both the market consensus and the agency's own preliminary estimate. The increase brought real GDP back to -- and indeed 0.2 percent above -- its pre-pandemic level. Coupled with the 0.8 percent growth posted for October, StatsCan estimates that real GDP likely rose at a 6.5 percent annualized rate in the final quarter of 2021, which would mean that real growth for the year as a whole was 4.9 percent. 

Details of the report are generally strong. Output of both goods and services rose in the month, with seventeen of the twenty sub-sectors tracked by StatsCan posting gains. The only notable decline was posted in the extractive sector, including oil and gas. This decline followed seven straight months of growth in this sector, and appears to be partly related to the impact of serious flooding in British Columbia during the month.

There is always a fly in the ointment, of course, and in this case it relates to the sheer amount of time that has passed since these figures were collected. It may be hard to credit, but back in November most people (and policymakers) were only starting to learn that omicron is the fifteenth letter of the Greek alphabet. The new COVID variant quickly triggered major new restrictions in all parts of Canada. As a direct result of this, StatsCan's preliminary estimate for December looks for real GDP to be almost unchanged in the month, with a pullback yet again in the accommodation and food services sectors. With the restrictions largely remaining in place, a similar outcome is also likely in January.

The omicron wave now appears to be ebbing, and restrictions are already being eased in many Provinces, including Ontario and Quebec. It seems likely that real GDP will rebound smartly in February, with further gains likely in March as restrictions are eased further. By coincidence, the GDP data for December and for all of 2021 are due for release on March 1.  And the next Bank of Canada rate announcement? March 2!