GDP Down 2.1% in 1st Quarter
CBJ — From Statistics Canada:
Real gross domestic product (GDP) fell 2.1% in the first quarter, owing to reduced household spending and widespread shutdowns of non-essential businesses in March, in response to the COVID-19 pandemic. Final domestic demand fell 1.5%.
The downturn in GDP—the sharpest since the first quarter of 2009—reflects measures imposed in March to contain the pandemic, such as school and non-essential business closures, border shutdowns, and travel restrictions, as well as events earlier in the quarter, mainly the Ontario teachers’ strike and rail blockades in February.
Household spending was down 2.3% in the first quarter of 2020—the steepest quarterly drop ever recorded. Spending reductions were influenced by substantial job losses, income uncertainty, and limited opportunities to spend because of the mandatory closure of non-essential retail stores, restaurants and services, and restrictions on travel and tourism activities.
Governments’ final consumption expenditure fell 1.0%, the largest decline since the first quarter of 2013, reflecting school closures and curtailed government administration.
Exports fell 3.0%, and imports declined 2.8%, as major trading partners—notably, the United States, China, and most European countries—implemented similar public health measures.
Businesses drew down $3.7 billion in non-farm inventories, owing to supply chain disruptions. Despite the inventory draw down, a substantial decline in sales volumes, which resulted from store closures and lower household demand, raised the economy-wide stock-to-sales ratio from 0.863 in the fourth quarter of 2019 to 0.872 in the first quarter of 2020.