Canada’s gross domestic product in August rose by 0.4% to CA$1.97 trillion, led by continued rising demand for client-facing business services, according to data released by Statistics Canada on Friday.
The rise in spending on in-person services led the economic recovery, as August marked the first full month of most COVID-19 restrictions being lifted across the country, as well as Canada opening its borders to vaccinated U.S. residents.
Accommodation and food services rose 7%, with August smack in the high season of travel. Domestic and international travelers alike set off on their long-awaited trips, driving up demand for hotels, recreational camps and restaurant patios.
As arenas and theaters opened their doors to spectators and increased gathering limits, arts, entertainment and recreation—a sector profoundly hurt by the pandemic—increased by 6.4%. The pent-up demand resulted in sports, art and music events drawing large crowds, which is likely to continue.
Meanwhile, the effects of climate change dented Canada’s recovery. Extreme heat waves and droughts continued to wreak havoc in the agriculture, forestry, fishing and hunting sectors, where GDP continued the downward trend from July by another 5.7%. Crops withered in the drought, shellfish got cooked alive during multiple heatwaves this summer, and cattle had to be culled as a result of drought-induced low animal feed supply.
GDP in September and the rest of the year will see substantial increases in oil and gas extraction but a contraction in manufacturing due to ongoing supply chain issues.
The takeaway
Canadians rejoiced to meet in person this summer after 18 months of the pandemic, driving up demand for all services from restaurant dining to hotels to sports, art and music events.
The recovery remains rocky, though, as gains are offset by supply chain challenges affecting manufacturing, transportation and retail sales.
