The Canadian economy contracted by 0.3% in May, the second consecutive month of decline following a 0.5% contraction in April. Services and goods sectors declined by 0.2% and 0.4% respectively as restrictions from the third COVID wave continued to dampen economic activity. Construction activity declined 2.3% in May, with a 4.2% drop in residential building construction led by declines in single-family home construction. The real estate sector fell 7.2% in May, following a 10.7% drop in April, due to slowing home sales.
While the post-pandemic economic recovery remains strong, many sectors are grappling with conditions that have led to shortages of raw materials and labour. As the economy converges to pre-crisis levels, costs of some inputs remain elevated as supply chains readjust. Although Statistics Canada reported contractions in April and May, based on advanced data the agency estimates that June real GDP rose 0.7%. As a result, the agency's preliminary forecast is for a 0.6% increase in real GDP in the second quarter of 2021.
Copyright British Columbia Real Estate Association. Reprinted with permission.