Data released last week showed that Canadian manufacturing activity expanded at a record rate in March, as the easing of coronavirus restrictions helped provide a tangible boost.
The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) increased to a seasonally adjusted 58.5 in March, up from the 54.8 recorded in February. March’s reading was the highest reading in the 10-year history of the survey.
Also, the new orders index increased to 58.0 from the 54.4 recorded in February, whilst the measure of output was at 57.7, up from 52.0. March’s reading was the highest since November 2013.
Shreeya Patel, an economist at IHS Markit, said in a statement:
“Canadian manufacturers ended the first quarter of 2021 on an upbeat note,”
“The growth was driven by stronger demand as COVID-19 restrictions continue to ease across the provinces.”
Shreeya Patel
As well as being the fastest rate of expansion in survey history, the latest reading records a ninth consecutive month of expansion in Canada’s factory activity.
Canadian Economy in Good Shape
Currently, the third wave of coronavirus continues in Canada. However, the growth in manufacturing activity provides further confirmation that the Canadian economy is actually in a good shape.
Statistics Canada reported almost 17,000 new businesses were created in December. The figure is higher than the monthly average of 15,725 in the five years before the pandemic. December’s figure also followed above-average gains made in October and November too.
Canada has experienced a very steep V-shaped 2020 with a faster than expected recovery in the first three months of 2021.
Elsewhere in economic news, especially In the Canadian employment sector, there are concerns. Only 80 percent of jobs lost during the pandemic have been recovered. This means there are 600,000 fewer Canadians in employment than before the pandemic started. Also, the number of Canadians out of work for more than six months has risen to be between 1.4 million and 1.6 million since last May, a jump of around 66%. The Parliamentary Budget Officer expects the unemployment rate to remain above the 2019 rate of 5.7 percent until 2023.
However, it seems that the Canadian economy is robust enough to withstand the latest round of restrictions. The Conference Board of Canada recently forecast full year growth in 2021 of almost 6 per cent.
Now, according to National Bank, the Canadian economy is only down around 2 percent from the pandemic peak. At that time, amid national shutdowns, the economy plunged 18 percent.
As the vaccination speeds up, the future is looking solid for the Canadian economy. Annualized growth in the first quarter of 2021 is likely to register at more than 5 per cent. Expect growth to accelerate once the infection rate subsides.
