OTTAWA (Reuters) - Canada’s real GDP is likely to grow 3% in May, bouncing back from a record decline in April, Statistics Canada said in a flash estimate on Tuesday, as businesses across the country began to reopen following coronavirus-linked shutdowns.
Growth in April plunged by 11.6% from March, a record month-on-month decline, although the fall was less than the 13% predicted by analysts. Statistics Canada revised March’s decline to 7.5% from 7.2%.
All 20 industrial sectors of the Canadian economy were down in April, StatsCanada said, as most non-essential businesses remained shut to slow the spread of the novel coronavirus.
The goods-producing sector posted a 17.0% decrease, led by sharp declines in manufacturing and construction, with the service sector down 9.7% on sharp plunges in the hospitality, retail and transportation sectors, the StatsCan data showed.
Air transportation was the hardest hit, falling 93.7%.
“April was a ‘mense horribilis’ for the Canadian economy, and the only thing good about it was that in all likelihood it marked the bottom of this short but extremely deep recession,” Avery Shenfeld, chief economist at CIBC Capital Markets, said in a note.
In May, regions across Canada began phased reopenings. That helped bolster output across sectors, including manufacturing, retail and wholesale, Statistics Canada said.
But the May bounce does not change forecasts for the second quarter, as it follows a deep plunge in April and a downward revision to March’s data, Douglas Porter, chief economist at BMO Capital Markets, said in a note.
“The small estimated comeback in May is roughly a wash,” he said. “We expect a bigger bounce in June as the economy re-opened more fully, which should contain the overall damage in Q2.”
The Canadian dollar maintained its earlier decline, trading about 0.2% lower at C$1.3680 to the greenback, or 73.10 U.S. cents.
Additonal reporting by Dale Smith in Ottawa and Fergal Smith in Toronto; Editing by Bernadette Baum and Andrea Ricci