The economy contracted at an annualized rate of 1.1 per cent in the second quarter, Statistics Canada said Tuesday.
It was the first quarterly contraction recorded since the sharp drop in real gross domestic product in the second quarter of 2020 during first-wave lockdowns.
And it was a sharp turnaround from the agency’s initial estimate last month that the economy expanded at an annual rate of 2.5 per cent for the April-to-June period.
Statistics Canada said driving the drop in the second quarter of this year were declines in home resale activity and exports.
The agency said increased business and government spending, as well as new home construction and renovations weren’t enough to make up the shortfall.
Household spending also stayed flat in the quarter.
The second quarter ended with the economy growing by 0.7 per cent in June after two months of declines, placing total economic activity 1.5 per cent below pre-pandemic levels recorded in February 2020.
However, the agency also said its initial estimate for July shows a contraction of 0.4 per cent for the month.
Statistics Canada said the main decreases in July were in manufacturing, construction and retail trade, while accommodation and food services had strong monthly gains as public health restrictions eased.
Total economic activity in July was about two per cent below pre-pandemic levels recorded in February 2020.
CIBC senior economist Royce Mendes says the figures suggest the Canadian economy wasn’t on as strong a footing as many believed at the start of the third quarter of the year.
“And with the fourth wave now seemingly here, the economy faces another storm to navigate through,” he wrote in a note.
The Canadian Press