Canada's economy grew another 0.4% in October, but still well shy of pre-COVID level

Canada's economy grew by 0.4 per cent in October, the sixth straight month of expansion after a record-setting plunge in April.

Statistics Canada said Wednesday that the country's gross domestic product grew thanks to a 0.1 per cent expansion in goods-producing industries, and a 0.5 per cent increase from the service sector.

The overall gain was slightly better than the 0.3 per cent that economists had been expecting.

The numbers mean that as of October, the total value of all economic activity in Canada was worth just over $1.9 trillion, on a seasonally adjusted annual rate.

In February, before COVID-19 hit, the economy was producing just over $2 trillion, at a seasonally adjusted annual rate. That means despite six straight months of growth, Canada's economy is still producing $83 billion less than it was before the pandemic hit.

Most industries grew, except for manufacturing and the food and accommodation sector, which continues to be hard hit by COVID-19.

'A better glow' on prospects for 2021

As it has started doing for every month during the pandemic, Statscan offers a glimpse of the early numbers for the next month along with each month's data. The estimate for November's data is for another 0.4 per cent rise, which if it comes to pass still means the economy will be on track to be almost four per cent below where it was before COVID-19.

(It's worth noting that the data agency's advance look for October was for 0.2 per cent growth, and the final number ended up being twice that.)

Economist Doug Porter with Bank of Montreal said the advanced reading for November is better news than anything that was in the October data, as there were fears that November could have been a dud.

"Recall that November saw new restrictions in a number of regions, including in Toronto, and many were bracing for the possibility of an outright decline in activity," he said.

If the decent showing comes to pass, that will bode well for the next few months, as the country waits for mass vaccination to help things get back to normal.

"The solid back-to-back gains near the end of the year not only put a better glow on the prospects for 2021, but they even will likely lead to some reassessment of just how deep the damage was for this year," Porter said.

Other views aren't quite so rosy.

Sri Thanabalasingam with TD Bank is among those expecting the numbers to take a turn for the worse in the coming months, given what we already know about the virus's spread since October.

"The health and economic landscape have shifted significantly since October. The spread of the virus has become even more alarming, and provinces are reacting with strong measures," Thanabalasingam said. "Lockdowns in Alberta and Ontario point to an economic contraction in December and possibly January. Only as health outcomes improve can the economy find its legs.

"Let's hope this happens sooner rather than later."