MNI REALITY CHECK: Canada GDP Holding up on Commodity Demand

Canadian industry leaders told MNI the economic rebound will continue through the pandemic's third wave on a housing boom, progress with vaccinations and strong demand for exported commodities.

Homebuilding and exports are two main sectors driving first-quarter GDP growth during massive lockdowns in provinces like Ontario and Quebec. The MNI economist consensus is for annualized growth of 6.7% in a report due Tuesday at 8:30am EST, slightly above Statistics Canada's flash estimate. While slower than the fourth quarter's 9.6% pace, any growth still defies some predictions around the end of last year that the third Covid wave would cause output to shrink again.

StatsCan will also report monthly GDP for March at +1.0% according to the economist consensus, and investors should also watch for a flash April estimate setting the trend for the second quarter. While April's GDP may decline on the third-wave shutdowns, the summer months may show a solid rebound as a clear majority of Canadians are likely to be vaccinated.

John Corey, Freight Management Association of Canada President:

"The Canadian economy is growing," he said. "Grain exports are growing every year as an example, and there are a lot of infrastructure projects in Canada reflecting the idea that there is going to be growth in the medium to long term."

"Things are probably are getting back to normal and people are getting out and spending all that money that they saved or got, and it's going to be a boost to the economy," Corey said.

"In the container area we are having issues with ocean-going carriers because of the limited supply, and there is still great demand for container goods coming from Asia. It seems that this high demand for container traffic is going to continue well into 2021 and 2022."

Susan Yurkovich, BC Lumber Trade Council President:

"We see ongoing strong demand particularly in North America," she said. "It will moderate a bit and prices will moderate in mid-term future as supply gets replenished, but I think we would have higher prices than the pre-pandemic" Yurkovich said.

"We cannot just ramp up production to meet these high prices," in part because of provincial regulations on annual harvesting, she said. That may lead producers to focus on higher-value wood products.

The U.S. housing boom led by those aged 25 to 34 is driving demand, and it's driving up prices for all kinds of building materials, she said.

Jeanette Jackson, CEO of Foresight Cleantech Accelerator Centre:

The industry's growth has continued through the pandemic as increased government support for tackling climate change offsets uncertainty for entrepreneurs about taking the lead on clean technologies, she said.

"What we have seen in the last three months of 2020 and the start of 2021 is climate and sustainability is a fronting center to all of the recovery packages," Jackson said.

The economic recovery is overwhelming any investment slowdown for industries facing supply disruptions such as transportation and manufacturing, she said. "The pandemic affected growth, but what we have seen is that recovery is so strong that it's negligible."