Economy-wide output recovers to pre-COVID levels in November

Real gross domestic product rose 0.6% in November, marking the sixth consecutive month that output has expanded. November’s headline increase was also the first time that economy-wide output has fully recovered to pre-COVID levels, nineteen months after the initial lockdowns in March and April 2020. Growth in November was broad-based for the second consecutive month with 17 of 20 industrial sectors posting gains.

Wholesalers posted their largest increase since July 2020, supported by gains in building materials and supplies, and machinery and equipment. Output in the wholesale sector has risen for four consecutive months, after declining from April to July. At 2.0% above pre-pandemic levels, wholesaling activity in November was similar to levels reported in March 2021.

Factory output rose 1.4% in November, buoyed for the second consecutive month by higher production at automakers and parts suppliers. Output at assembly plants has risen sharply since September, but remains nearly 40% below pre-pandemic levels as supply chain disruptions continue to affect production. Total manufacturing output in November was 2.5% below levels observed in February 2020.

Activity at real estate agents and brokers edged down following a notable increase in October. While housing market activity has moderated substantially after surging earlier in the pandemic, activity levels at agents and brokers remained almost 30% above pre-pandemic levels.

Air transportation continued to recover in November, posting an eighth consecutive monthly increase. Nonetheless, activity remained over 60% below levels observed in February 2020. Accommodation services rose for the sixth consecutive month, but remained 13% below pre-pandemic levels.

Statistics Canada’s advance estimate indicates that real gross domestic product was essentially unchanged in December.

Headline consumer inflation at a 30 year high in December

Headline consumer inflation accelerated to 4.8% in December, the largest yearly increase in three decades. The headline rate has been above the 3% for nine consecutive months, reflecting upward pressure from gasoline, shelter, consumer durables, and food. Measured on a month-over-month basis, consumer prices edged down 0.1% in December, after increasing steadily during the first eleven months of the year.

At year end, annual price increases for food, shelter and transportation were all above the headline rate. Headline consumer inflation has outpaced the growth in average hourly wages, measured from the Labour Force Survey, for nine consecutive months.

Employment losses in January as restrictions tighten in response to Omicron variant

Employment fell by 200,000 in January as tighter capacity limits and closures impacted high-contact sectors. Over two-thirds of headline losses reflected lower employment among youth, with declines in both part- and full-time work. Employment among core-age workers fell by 65,000, largely reflecting part-time losses among women. Losses in accommodation and food services totalled 113,000, the largest monthly decrease in that sector since the initial lockdowns in the spring of 2020. Employment also fell in information, cultural and recreation industries, and in retail trade. Nearly three-quarters of January’s headline losses reflected lower employment in Ontario.

January’s losses marked the first decrease in headline employment in eight months, when tighter public health restrictions in response to the Gamma variant were still in effect. The unemployment rose 0.5% to 6.5%, the first increase in nine months.

Total hours worked fell 2.2% in January after rebounding to pre-COVID levels in November and December. The number of employed people who worked less than half their usual hours rose by 620,000, the largest increase since March 2020.

One in ten employees was absent from work due to illness or disability—one-third higher than typical January levels—with sizable increases in accommodation and food services and retail trade. Almost one quarter of workers in January reported that they usually work exclusively from home.

Source: Statistics Canada