Canada's economy looks like it shrank by 5% last year, says Statistics Canada

Canada's economy expanded by 0.7 per cent in November, Statistics Canada said Friday

The data agency said the country's gross domestic product grew seven months in a row after steep drops in March and April. But despite that streak, the numbers mean the economy was still three per cent smaller in November than it was in February, before COVID-19 really took root in Canada.

The agency also says its preliminary estimate for December shows growth of 0.3 per cent, even as much of the country headed into heavy restrictions to slow the spread of COVID-19.

For the full year of 2020, Statistic Canada's preliminary estimate shows the economy contracted by 5.1 per cent.

By way of comparison, preliminary U.S. data suggests their economy shrank by 3.5 per cent for the year.

Bank of Montreal economist Doug Porter said the November numbers came in as a pleasant surprise, as the data agency had telegraphed earlier that the economy looked like it had only grown by 0.4 per cent. The final numbers were almost twice that. 

Economists were also expecting a shrinkage in December, as lockdowns took hold, but Statscan is now suggesting a small gain for that month, too.

'The road ahead is challenging'

"We still believe that with schools closed in some regions, and some additional restrictions, that GDP will likely pull back in January — and next week's jobs report for that month will provide plenty of guidance on that front," Porter said.

"However, today's result for November and early read on December do indeed suggest that the economy overall is managing much, much better with this second stage of lockdowns."

TD Bank economist Sri Thanabalasingam agreed that Friday's numbers were good news, and called them a "solid report," but cautioned against being overly optimistic about the direction of the economy headed into 2021.

"Let's not get too far ahead of ourselves," Thanabalasingam said. "The road ahead is challenging, and growth appears to be slowing. Even at the 0.3 per cent estimated pace of growth in December, it would take until November this year for the economy to get back to its pre-pandemic level."