Real gross domestic product (GDP) rose 0.7% in March, following a 0.9% expansion in February. Broad-based increases across most sectors were led by client-facing industries.

Advance information indicates that real GDP increased 0.2% in April. Owing to its preliminary nature, this estimate will be updated on June 30 with the release of the official GDP data for April.

Client-Facing Industries Continue to Lead the Growth, Benefiting From Easing of Public Health Restrictions

In March, the client-facing industries continued to recover ground lost in December 2021 and January 2022 when public health measures were put in place to dampen the spread of the Omicron variant.

Transportation and Warehousing Keeps Rolling

Transportation and warehousing rose 3.2% in March, following a 2.4% growth in February, as 8 of 10 subsectors were up.

Strength in Manufacturing Continues

Manufacturing rose 0.9% in March, surpassing the February 2020 pre-pandemic level of activity. Increases in both durable and non-durable goods manufacturing contributed to the sixth consecutive monthly expansion in the sector.

Durable goods manufacturing grew 1.2% in March as 6 of 10 subsectors were up. Transportation equipment manufacturing contributed the most to the growth. The computer and electronic products manufacturing subsector rose 8.4%, as all industries were up, while furniture and related products declined by -3.9% and primary metal manufacturing declined -1.5% to offset some of the growth.

Non-durable goods manufacturing grew 0.5% as five of nine subsectors were up in March. Leading the growth was a 5.5% gain in plastics and rubber products, partly due to higher demand from motor vehicle and motor vehicle parts manufacturers, and a 1.3% increase in food manufacturing as the majority of industries expanded. Chemical manufacturing contracted 1.7%, reflecting a 9.8% drop in pharmaceutical manufacturing following a period of elevated activity.

Wholesale Trade Declines

Wholesale trade contracted 0.7% in March, down for the third month in a row, as five of nine subsectors were down. Machinery, equipment and supplies wholesaling contributed the most by declining 3.9%  in March, as all industries comprising the subsector were down. Miscellaneous wholesaling grew 4.2%, the second month of growth while building materials and supplies wholesaling expanded 1.7% in March, benefiting from an increase in construction activity.

Retail Activity Shrinks for the Second Month in a Row

The retail trade sector contracted 0.6% in March, down for the second month in a row, as a decline in the motor vehicle and parts dealers subsector more than offset gains in the majority of other subsectors. Excluding motor vehicle and parts dealers, retail trade rose 0.7%. 

First Quarter of 2022: A Quarter of Two Tales

Economic activity expanded 0.8% in the first quarter of 2022, representing a third consecutive quarterly gain. Goods-producing sectors, specifically construction, manufacturing and agriculture, forestry, fishing and hunting, were among the largest contributors to growth, as all continued to rebound for a second consecutive quarter from declines recorded earlier in the course of 2021. Several client-facing service industries were detractors to growth in the first quarter of 2022, in large part due to the impact of restrictions that were introduced or tightened in December 2021 and January 2022 to curb the spread of the Omicron variant.

Most Goods-Producing Sectors Contributed to Growth in the First Quarter

Construction expanded 3.3% in the first quarter with gains across all subsectors. Residential building construction was a significant contributor to growth, rebounding from the declines recorded in the previous two quarters, although still sitting 5.5% below its peak observed in the second quarter of 2021.

The manufacturing sector rose 1.9% in the first quarter of 2022, with transportation equipment manufacturing driving the gains for a second quarter in a row. Motor vehicle and parts manufacturing led growth as supply-chain issues and semi-conductor shortages abated in the Canadian market in the second half of the quarter and exports rose. Other transportation equipment manufacturing also grew strongly in the quarter.

Agriculture, forestry, fishing and hunting expanded 5.8% in the first quarter, as activity related to crop production continued to rebound following the low output levels from the 2021 harvest that were a result of record-setting heat, drought and forest fires in Western Canada.

Detracting from the growth in goods-producing industries was the mining and quarrying and oil and gas extraction sector which saw a 2.3% decline.

Covid-19 Limits Growth for Client-Facing Industries

Accommodation and food services declined by 1.2% and arts, entertainment and recreation declined by 0.8% in the first quarter, despite gains observed in February and March as COVID-19 restrictions were loosened. However, transportation and warehousing was able to post a slight increase of 0.2% in the first quarter in large part due to the rebound observed at the end of the quarter as some international travel restrictions were loosened.

Professional, scientific and technical services grew by 1.9%, up for a seventh consecutive quarter, were the strongest contributor to growth in services-producing industries in the first quarter of 2022. Computer systems and related services, which also expanded for a seventh consecutive quarter, led growth over that period.

Source: Statistics Canada