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Canada's economy grows for tenth straight month

Jessy Bains
·2-min read
Construction workers works on building new homes in Calgary, Alberta, May 31, 2010.  Gross domestic product grew at a 6.1 percent annual rate, the biggest jump since the fourth quarter of 1999, and by 1.5 percent compared with the fourth quarter of last year, Statistics Canada said on Monday. REUTERS/Todd Korol  (CANADA - Tags: BUSINESS)
Construction rose 2 per cent for the third straight month (REUTERS)

Canada's economy grew 0.4 per cent in February, for the tenth straight month of growth in the face of COVID-19 lockdowns.

Statistics Canada says economic activity is 2 per cent below February 2020.

Services-producing industries rose 0.6 per cent while goods-producing industries contracted 0.2 per cent for the first decline since April.

"Services industries did much of the heavy lifting as many provinces eased lockdown measures, while a number of goods sectors contracted in both February and March," said CIBC senior economist Royce Mendes.

"That said, much if not all of the recent progress in non-essential high-contact services industries will likely be reversed during this third wave."

Retail trade rebounded 4.5 per cent in February, but renewed lockdowns since mean the recovery may be short-lived. 

Construction rose 2 per cent for the third straight month, led by a 4.7 per cent increase in residential construction. Home alterations and improvements, and single-family home construction were the primary drivers.

Mining, quarrying, and oil and gas extraction fell 2.8 per cent for the first decline in six months. The manufacturing sector contracted 0.9 per cent, following 1.5 per cent growth in January,

A preliminary estimate points to a 0.9 per cent increase in March. That brings first-quarter GDP to 1.6 per cent and paves the way for the Bank of Canada to reduce stimulus.

"Such a performance remains consistent with expectations around the evolution of spare capacity that sees it closing by year-end or early next year," said Scotiabank head of Capital Markets Economics Derek Holt.

"That in turn sets the stage for further tapering steps by the Bank of Canada and ending purchases of Government of Canada bonds later this year ahead of the closure of spare capacity."

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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