Canada’s economy buckled under the strain of COVID19 as measures to contain the virus locked down activity resulting in job losses and shuddered businesses. Additional pressure came from the sharp decline in commodity prices with oil falling to the lowest level in more than two decades. Assessing the damage has become a full-time job and we have updated our forecasts to incorporate the latest developments. After provincial governments declared a state of emergency starting in mid-March, economic activity collapsed with real GDP falling 9% in the month of March, a record-breaking decline. Job losses tallied more than one million and the unemployment rate jumped 2.2 percentage points to 7.8%. March’s sizeable decline however paled in comparison to April when 2 million jobs were lost and the unemployment rate surged to 13%. Hours worked fell by 15% and were off almost 28% from February which we expect will translate into a 11% drop in April GDP. Given this starting point, we revised our call for Q2 GDP to \u201340% annualized. <\/p>\n
It is still too early to say with absolute certainty that April will mark the worst for the economy. However, Canada has seen the number of COVID-19 infections stabilize or decline in all provinces resulting in some announcing plans to re-open parts of the economy. Select provinces allowed construction sites, manufacturing operations and some service-providers to open in early May and articulated the timetable for additional areas to reopen. There are indicators that businesses have begun the process of adapting to a contact-less business model, even ahead of any reopening. Business confidence ticked higher towards the end of April and our own tracking of credit card purchases showed some easing in weakness in household spending late that month. <\/p>\n